EJM Financial Services

How Much Superannuation Do You Need In Retirement

Your super is an incredibly important asset in your life – especially when it comes to retirement planning. 

It’s important to start thinking about how much you have in your super fund as early as possible. 

Australians can expect to live in their retirement phase for 20-30 years. Most would like to live comfortably during their retirement and make the most of their free-time to travel and take up new hobbies and activities. 

Unfortunately, most Australians won’t have enough in their super fund to last them their entire retirement. 

Often, the amount that is put aside into your superannuation by your employer isn’t enough on its own for you to live your dream retirement. This can lead to a lot of stress about running out of money in a time of your life that is supposed to be relaxing. 

However, it’s important for you to know that there are many aspects to superannuation and strategies you can use to grow your retirement savings and ensure you have financial freedom after your hard working years. 

How Much Superannuation Do You Need In Retirement?

This question applies differently to everyone. It’s important when thinking about how much you need in your retirement savings to think about two things:

  1. Your major expenses in retirement
  2. The lifestyle you dream of living in your retirement years. 

It’s never too soon to start planning for the future. 

Some major expenses that may apply to you are:

  • Paying off your mortgage 
  • Rent
  • Renovating you home 
  • Travelling 
  • Medical Costs
  • Everyday living costs like food and bills

According to moneysmart.gov.au, if you are someone who owns your home entirely, on average you will need 67% of your pre-retirement income to maintain the same standard of living in retirement. 

The Association of Superannuation Funds of Australia (ASFA) estimated the ideal lump sum that is needed for Australians who want to live a comfortable lifestyle during their retirement. They suggest for:

  • A couple – $640,000/ year 
  • Single person – $545,000

It’s important to note that these estimated sums don’t take into account your individual situation. 

You can use these sums as a guide when considering how much you want to have in your super for when you retire. 

If you think you might be one of the many Aussies who doesn’t have enough superannuation, there are some things you can do to give your super a bit of a pre-retirement boost!

What Can I Do To Look After My Super?

If you’re employed, your employer must pay at least 10% of your income each time you are paid, into your super fund. This is classified as the super guarantee. 

However, it’s important to ensure that you are being paid the right amount, which you can do by checking your payslip, or your super fund, or your myGov account.

On top of the compulsory Super Guarantee, what else can you do to grow your super?

Here are some strategies that you can explore to ensure you are looking after your super: 

  • Choose a super fund with lower fees, 
  • Check and compare your fund’s performance with others, 
  • Consider combining your funds if you have more than one,
  • Check if you have insurance cover through your super fund before considering changing funds,
  • If you’re self-employed you may want to consider choosing a SMSF for extra flexibility.

How Can I Boost My Superannuation?

You can make extra payments to your super fund as a way of boosting your retirement savings. It’s important to consider these options sooner rather than later, so you can stay on track of building your savings for your dream retirement lifestyle. 

There are two types of voluntary contributions that you can consider making to your super:

  • Concessional contributions: are payments put into your super fund from your pre-tax income. 

Salary sacrifice is a concessional contribution strategy, where you can ask your employer to pay part of your pre-tax pay into your super fund. This is beneficial as it usually allows you to pay less tax while simultaneously boosting your retirement savings. 

  • Non-concessional contributions: are payments you can make to your super from your after-tax pay. You can make up to $110,000 in non-concessional contributions each financial year. 

When Can I Access My Superannuation?

You can access your super when you have reached your ‘preservation age’, which is currently between 55 and 60, depending on your date of birth. 

You might be someone who reaches their preservation age but still wants to continue working. If so, you can access part of your super through a transition to retirement pension. 

The closer you get to retirement age, the more crucial your superannuation is. 

It’s important to look at ways you can build your retirement savings as early as possible. There are a number of ways to go about superannuation, including looking into superannuation co-contributions and considering a ‘salary sacrifice’ agreement with your employer so you can make personal contributions. A comfortable retirement is absolutely achievable given the right financial plan in place.

If you’re looking for the best retirement plans, reach out to EJM Financial Services today! We are passionate about Creating Happiness for your retirement. We love helping people reach their financial goals through easy, tailored financial solutions.

Book a complimentary financial review session today! 

EJM Financial Services Pty Ltd (ABN 63 006 492 182), is an Authorised Representative and credit representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee 232706 and Australian Credit Licence 32706. AMPFP Privacy Policy. Please read our Terms and conditions.
General Advice Warning: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

0 Comments

Your email address will not be published. Required fields are marked *