Insights

How much retirement costs depends on what you want out of retirement, and your individual needs and circumstances. The lifestyle you want may look different to another person's, so your living costs will be different. For example, you might prioritise travel, whilst your friends want to stay close to the grandchildren at home.

However, there are ways to get an overview of what a typical retirement might cost, as a starting point.

• You could choose to use a rule of thumb such as needing 70% of your working life income once you retire.
• You could use the Association of Superannuation Funds of Australia (ASFA) Retirement Standard. The ASFA Retirement Standard estimates how much money it costs for different lifestyles in retirement. It helps you understand the difference between estimated costs for a modest and comfortable lifestyle, according to the ASFA definitions.
• You could also use the Super Consumers Australia's Retirement Savings Targets, which is another tool to help you estimate what level of savings you need to support your planned spending in retirement. It calculates savings targets based on your age and spending plans.

Both of these estimates are based on owning your home in retirement. If you are renting, your costs will likely be higher. It’s important to only use these estimates as a guide and plan your retirement costs based on your individual needs.

Consider if you'll retire with debt

Many people retire still owing money on their mortgage or other assets like their car.

If you're approaching retirement, you can take steps to get debt under control.

If you still have debts when you reach retirement age, you could choose to pay off the debts using:

• your superannuation
• other savings, such as proceeds from downsizing your home

Before going ahead with any of these options, check the tax impact and whether it will affect your government benefits.

Consider speaking to us to help you understand your options.

Plan your retirement goals and lifestyle

How much retirement costs depends on what you want out of retirement, and your individual needs and circumstances. So, an important step in planning costs is considering your personal circumstances and the kind of lifestyle you want to live.

Think about the things that matter to you.

• A modest lifestyle might include prioritising smaller local experiences instead of big holidays, staying connected with your community, and choosing quality over quantity. Managing your money thoughtfully can mean less financial pressure and provide peace of mind.
• A more comfortable lifestyle may offer more chances to travel, dine out and make upgrades to your home.

Both approaches can provide a fulfilling retirement. It’s about matching your plans to your savings.

Work out your retirement living costs

Once you know how you intend to live, you can work out your living costs and create a budget.

Understanding your current spending habits will help you plan your future needs. Think about the main money categories:

• Income
• Home and utilities
• Insurances
• Groceries
• Personal and medical
• Entertainment & eating out
• Transport & auto
• Children and grandchildren

Consider your future costs and how they may change when you retire. For example, you may not be paying for professional membership fees or transport to work.

Renting in retirement

If you are renting your home in retirement, you’ll need to factor this into your budget. Allow for increases in rent over time and check if you’re eligible for government assistance.

Rent is a big ongoing expense and can cause financial stress. If you’re struggling to make ends meet, there are services that can help you.

Key actions you can take

• Track your spending to work out how much you might need to budget for in retirement
• Consider your goals for when you retire and if you can grow your super balance while you’re still working.
• Use the budget planner to calculate how much you will need in retirement, including costs if you have a mortgage, rent or debts.
• Speak to us if you have any questions about your financial situation.

If you have any questions and would like to discuss how we can help you work towards your retirement goals, we encourage you to contact your financial adviser.

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General Advice Warning - Any advice included in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider whether it's appropriate to you, in light of your objectives, financial situation or needs.