The Magic Number: How much is enough in retirement

1st August 2016 | Wealth Creation

“How much do I need to retire?” The burning question for many soon-to-be retirees, and as financial planners, the most common question we get asked.

Unfortunately, there’s no one-size-fits-all answer when it comes to retirement funding.

The dollar amount we need to retire comfortably is based on a number of variables specific to your needs, so your “magic number” can and will be quite different to someone else’s.

Expectations vs. Reality

In our experience, many new clients believe they haven’t accumulated enough to fund their retirement. This belief is often based on reports in the media, rather than on logic or rational thinking.

For years, the media has reported that we need a minimum of $1 million to enjoy a comfortable retirement. But don’t let this figure alarm you. Many Australians as reported by The Association of Superannuation Funds of Australia Limited (ASFA), along with a large number of our own clients, have comfortably retired with much less.

The ASFA reported that in 2013/14, the average superannuation balance at the time of retirement for people aged between 60 and 64 was $292,500 for men and $138,150 for women.

These statistics demonstrate that either the media is significantly off the mark or we are inadequately funding our retirement.

The reality is likely somewhere in between.

But what’s right for you?

The amount you need to retire comfortably will depend on a number of factors from your lifestyle, spending habits and estimated life expectancy. 

While we can’t answer how long your retirement will last, we can quantify most variables to give you an estimated projection of how much you will need and how you can accumulate this figure.

There are many ways to generate wealth, and an important step when predicting investment returns in retirement, is to focus on generated income. Income comes in three forms:

1. Interest

2. Dividends and;

3. Rent.

As a rule of thumb, if we’re generating enough income to sustainably cover our cost of living, then we are generally on track to saving enough towards retirement.  

Good retirement planning however shouldn’t be crafted around a rule of thumb. Everybody will have a different strategy to reach their financial goals and as financial planners, we can help get you there.

Through solid strategic planning we help accelerate your retirement funding while you are still working and advise how to make your money work for you through retirement.

Want to create a wealth strategy tailored to your retirement goals?

Talk to us.



The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.

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