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When it comes to retirement, our smartCoaches are often asked about access to super and how much is needed for a great retirement lifestyle. Planning for retirement is about more than numbers, and we’ve got support available.
Some questions you may want to consider:
Timing - when do you want to retire?
Lifestyle - how will you spend your time, where will you live, what matters most to you?
Cost of living - what expenses will change after you retire?
Of course, there is more to retirement planning than this, but as we can’t answer all your questions here, please know our smartCoach team are available.
You can access your superannuation when you reach preservation age (see table). Once you reach preservation age you are able to make withdrawals from your super, tax free, subject to certain limitations.
Note that the age you can access the government Age Pension differs to your superannuation preservation age.
Date of birth
Preservation age
Before 30 June 1964
You have reached preservation age
From 1 July 1964
60
While it’s common to hear people need $1 million in super, it’s just not true for everyone.
The ‘right number’ for you will depend on your expectations in retirement – which means it’s going to be different for each person.
You can start by looking at your own numbers, using our calculators
The Association of Superannuation Funds of Australia (ASFA) states (as at September 2024) that a couple needs $73,031 a year for a comfortable lifestyle. For a single it’s $51,814 per year. They equate this to a couple having $690,000 in superannuation savings at age 67 or a single person having $595,000 (The ASFA Retirement Standard methodology was last reviewed in April 2018 and figures are updated quarterly to reflect changes to the Consumer Price Index). If you want to read more about what they define as comfortable, you can read all the details here.
One way to make this more specific for you is to review your current income and expenses. While some of your circumstances may change in retirement, your current financial situation can be a useful guide to how you’ll want to keep living.
Your weekend could last more than 20 years - it's worth thinking about just how long you will be retired.
Our calculator will help you estimate your life expectancy - plan that you will live longer than the average, when calculating your retirement needs.
Consider whether you would like to continue working in some capacity - maybe you don't want a full retirement straight away.
Super is one part of your financial picture. Consider other assets, such as property, investments, savings and any inheritance you may receive. And don’t forget to check your eligibility for the Age Pension.
Here are some quick ways to make an estimate:
Use the ASFA data above: $595,000 for a single or $690,000 for a couple (as at March 2023).
smartMonday has both a retirement budget planner and a modelling calculator available to help you.
Knowing your current expenses, and looking at what will change is a good way to begin planning.
Depending on where you are in your working week, the following considerations might help you.
Transition to Retirement account can help you top up any income lost through making additional pre-tax contributions to your super accumulation account.
The Age Pension is a safety net and many Australians are eligible for a full or part pension payment.
Consider making additional super contributions, delaying retirement, changing lifestyle and income expectations, or selling assets.
Contact a smartCoach for guidance in what you can do now to create the retirement you want. (Members that speak with smartCoaches are much more likely to take action and be prepared than those who don’t).
Check out our Ready to retire page to understand the steps you need to take to access your super.
1. Consider downsizing your home to boost your super
If you own a home it’s probably your most valuable asset. If you sold it, perhaps to buy a cheaper property, you could pay down any remaining debt and take advantage of the government’s downsizer option to add $300,000 to your super in one go.
2. Supplement your retirement income with a side hustle
Having a side hustle – a business on the side – is not just for younger people, it’s popular among retired people too. From ridesharing to freelance work, a side hustle can be a great way to top up your income in retirement but there’s a number of important points to consider if you’re going to do this, such as:
it could affect your Age Pension entitlement
if you’re audited by the tax office you could be up for repaying tax on undisclosed income and be penalised.
if you rent out your home or use it for your business it could affect your capital gains and land tax liabilities.
the need for insurance to cover people working for you or for public liability.
3. Inheritance – a mixed blessing?
The biggest downside to leaving an inheritance to others is that often you’ll need to constrain the quality of your retirement. Now, we love our kids (and other recipients) but we’ve also worked hard for most of our lives and deserve a little bit of fun as we head for the end of that long weekend we call retirement?
On the other hand, providing a financial legacy for your children can be a great thing to do, particularly in these days of high costs and stagnant wages. It’s really a very personal matter and one that should be informed by talking with a qualified Estate Planner. After all, if you’ve worked hard enough to put some aside for your loved ones you want that windfall to be a benefit and not a tax or probate burden.
4. The family factor
One of the aspects of retirement most people look forward to is lower expenses. ‘Once the kids are off our hands, our cost of living will be a lot less.’ If only that was always the case. Here are a few family-associated big-ticket items to consider in assessing whether you’re financially ready to retire:
Kidults. Statistically children are living with their parents longer
Weddings
Grandchildren
Financial support of children - eg. Helping them get a home deposit together
Illnesses and accidents
Don’t forget to factor these in to your planning.
Ask a smartCoach today on 1300 262 241, or
