Is $1 million enough to retire on?
Even $1 million in savings may not be enough for a ‘comfortable’ retirement, according to an analysis by financial journalist John Collett in Fairfax Media publications this week.
A million bucks will be barely enough for most people, Collett writes, based on estimates by the Association of Superannuation Funds of Australia (ASFA) which reveal the annual budget needed by Australians to fund either a “comfortable” or “modest” retirement.
But if $1 million in retirement savings isn’t enough, then how much is enough – and what’s a “comfortable retirement” anyway?
ASFA defines a “modest” retirement lifestyle as fairly basic, but better than the Age Pension, whereas a “comfortable” retirement lifestyle includes domestic and international travel, recreational activities, good clothes, a range of electronic equipment, a reasonable car and private health insurance, amongst other things.
All of which adds up to nearly $58,000 per year for a couple, ASFA estimates.
It’s worth noting that according to our member poll last week, 73% of you think Private Health Insurance is a necessary expense. So while a comfortable retirement will mean different things for different individuals, it’s important to know what’s in store for you.
The Government’s MoneySmart website has a raft of tools you can use to help you plan for your retirement and work out how much income you’ll need.
With all the rumours circulating about changes to the Age Pension and other entitlements in the May budget or afterwards, $1 million could be worth even less in future years, so start planning now.
What do you need to be comfortable in retirement? How much do you think you’ll need?
