Here's how much you REALLY NEED to retire comfortably, according to a new study
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There's no doubt that having enough superannuation is important for anyone looking to live comfortably in retirement. But for Australian seniors, it's especially critical, particularly when they are advised to have at least $550,000 in super to be able to maintain their lifestyle.
You read that right, folks. For a few of our members who are not aware of the Association of Superannuation Funds of Australia's (ASFA) report, it was said that the benchmark retirement income for a single retiree to be able to live comfortably in Australia is $545,000 while couples need to have an amount totalling to $640,000.
However, one financial advisor debunked this claim, saying that Aussie retirees would be needing much less than the nearly $550,000 benchmark…
Scott Pape, better known as the "Barefoot Investor", said that workers might retire on hundreds of thousands of dollars less than the aforementioned amount.
The financial advisor, along with Super Consumers Australia, has recently released a study, revealing that a super amounting to $302,000 is enough for a single person, while a couple needs approximately $402,000, assuming neither pays a mortgage or rent.
The organisation said that the numbers were calculated by analysing data from the Australian Bureau of Statistics on retirement spending, emphasising that the researchers also factored in inflation.
Having enough superannuation is important for anyone looking to live comfortably in retirement. Credit: Shutterstock/wavebreakmedia.
Meanwhile, the Barefoot Investor has previously proposed that retirees require as little as $250,000 in a scheme he dubbed the "Donald Bradman Retirement Strategy."
He explained: "If you own your own home, get the aged pension, and you're willing to do a bit of paid work, you could comfortably retire on as little as $250,000."
The strategy also suggested that pensioners would have to work once a day every two weeks to supplement their income.
"Either way, for far too long the super industry has played to the millionaires in the members' stand," Mr Pape claimed.
"What these figures do is give the average Aussie a fighting chance."
Effects of inflation on superannuation
Over the past three decades, Australian superannuation balances increased even more than the majority of big city home prices, but they are expected to decline as interest rates rise.
Consulting company SuperRatings estimated that a dollar invested in obligatory super at its introduction in July 1992 would be worth $7.67 today.
In contrast, according to figures from Macquarie University and CoreLogic, the median house in Sydney increased by 7.54 times in the same time frame, going from $183,300 in 1980 to $1,382,631 as of last month.
Superannuation balances are projected to decrease as the federal government maintains increasing interest rates. Credit: Pensions and Investments Online.com.au
Elsewhere in the report, it was revealed that Brisbane's midpoint climbed 6.92 times from $129,000 to $892,133 while Melbourne's equivalent value increased 7.8 times from $125,000 to $975,850.
Adelaide's mid-point also rose 6.46 times from $108,300 to $699,251, while Perth's mid-point grew 5.7 times from $102,500 to $585,114.
Superannuation balances are projected to decrease as the Reserve Bank of Australia continues hiking interest rates to combat inflation, which is currently running at 5.1%, the worst rate in 20 years.
According to SuperRatings, median balanced funds — money allocated to equities, which seek investment growth, and bonds, which prioritise income — would decline 3.3% in the year ending June 30, however, this would come after a 17.8% increase in 2020–21.
There you have it, folks! Basically, you will not be needing to have half a million dollars in superannuation just to maintain your lifestyle as a retiree in Australia. With a mix of budget planning and supplementing your income with part-time work or even small businesses, you can live comfortably throughout your retirement.
Also, we understand that we disclosed a lot of complicated facts in this article. So, we recommend checking out this video to have a better understanding of how increasing rates could affect inflation and costs of living:
Credit: YouTube/The Economist
You read that right, folks. For a few of our members who are not aware of the Association of Superannuation Funds of Australia's (ASFA) report, it was said that the benchmark retirement income for a single retiree to be able to live comfortably in Australia is $545,000 while couples need to have an amount totalling to $640,000.
However, one financial advisor debunked this claim, saying that Aussie retirees would be needing much less than the nearly $550,000 benchmark…
Scott Pape, better known as the "Barefoot Investor", said that workers might retire on hundreds of thousands of dollars less than the aforementioned amount.
The financial advisor, along with Super Consumers Australia, has recently released a study, revealing that a super amounting to $302,000 is enough for a single person, while a couple needs approximately $402,000, assuming neither pays a mortgage or rent.
The organisation said that the numbers were calculated by analysing data from the Australian Bureau of Statistics on retirement spending, emphasising that the researchers also factored in inflation.
Having enough superannuation is important for anyone looking to live comfortably in retirement. Credit: Shutterstock/wavebreakmedia.
Meanwhile, the Barefoot Investor has previously proposed that retirees require as little as $250,000 in a scheme he dubbed the "Donald Bradman Retirement Strategy."
He explained: "If you own your own home, get the aged pension, and you're willing to do a bit of paid work, you could comfortably retire on as little as $250,000."
The strategy also suggested that pensioners would have to work once a day every two weeks to supplement their income.
"Either way, for far too long the super industry has played to the millionaires in the members' stand," Mr Pape claimed.
"What these figures do is give the average Aussie a fighting chance."
Effects of inflation on superannuation
Over the past three decades, Australian superannuation balances increased even more than the majority of big city home prices, but they are expected to decline as interest rates rise.
Consulting company SuperRatings estimated that a dollar invested in obligatory super at its introduction in July 1992 would be worth $7.67 today.
In contrast, according to figures from Macquarie University and CoreLogic, the median house in Sydney increased by 7.54 times in the same time frame, going from $183,300 in 1980 to $1,382,631 as of last month.
Superannuation balances are projected to decrease as the federal government maintains increasing interest rates. Credit: Pensions and Investments Online.com.au
Elsewhere in the report, it was revealed that Brisbane's midpoint climbed 6.92 times from $129,000 to $892,133 while Melbourne's equivalent value increased 7.8 times from $125,000 to $975,850.
Adelaide's mid-point also rose 6.46 times from $108,300 to $699,251, while Perth's mid-point grew 5.7 times from $102,500 to $585,114.
Superannuation balances are projected to decrease as the Reserve Bank of Australia continues hiking interest rates to combat inflation, which is currently running at 5.1%, the worst rate in 20 years.
According to SuperRatings, median balanced funds — money allocated to equities, which seek investment growth, and bonds, which prioritise income — would decline 3.3% in the year ending June 30, however, this would come after a 17.8% increase in 2020–21.
There you have it, folks! Basically, you will not be needing to have half a million dollars in superannuation just to maintain your lifestyle as a retiree in Australia. With a mix of budget planning and supplementing your income with part-time work or even small businesses, you can live comfortably throughout your retirement.
Also, we understand that we disclosed a lot of complicated facts in this article. So, we recommend checking out this video to have a better understanding of how increasing rates could affect inflation and costs of living:
Credit: YouTube/The Economist
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