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How much do you need to retire in Australia in 2021?

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Posted (edited)

I'm wondering just how much you would need to retire these days, if you were single - or a couple. I appreciate it's a 'how long is a piece of string' question, but let's say for the sake of argument that the retiree(s) mortgage is paid off, they aren't renting, and they don't have any other loans or major outgoings. They lead a modest lifestyle, with one overseas holiday a year, and replace their car every 3-5 years. They are retiring at 60, so will be completely self-funded until they reach retirement age. Would $40,000 for a single person, or $60,000 per couple be enough?

Edited by Wanderer Returns
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35 minutes ago, Wanderer Returns said:

I'm wondering just how much you would need to retire these days, if you were single - or a couple. I appreciate it's a 'how long is a piece of string' question, but let's say for the sake of argument that the retiree(s) mortgage is paid off, they aren't renting, and they don't have any other loans or major outgoings. They lead a modest lifestyle, with one overseas holiday a year, and replace their car every 3-5 years. They are retiring at 60, so will be completely self-funded until they reach retirement age. Would $40,000 for a single person, or $60,000 per couple be enough?

https://www.superguru.com.au/retiring/how-much-super-will-i-need

 

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Posted (edited)
1 hour ago, Wanderer Returns said:

I'm wondering just how much you would need to retire these days, if you were single - or a couple. I appreciate it's a 'how long is a piece of string' question, but let's say for the sake of argument that the retiree(s) mortgage is paid off, they aren't renting, and they don't have any other loans or major outgoings. They lead a modest lifestyle, with one overseas holiday a year, and replace their car every 3-5 years. They are retiring at 60, so will be completely self-funded until they reach retirement age. Would $40,000 for a single person, or $60,000 per couple be enough?

You're asking how much your annual budget would need to be?  You could probably work that out for yourself by looking at how much you've spent in a normal year - just look at the withdrawals from your bank account and the spend on your credit card - , then ask yourself whether  that would change much once you retire.  

Then you've got to consider inflation.  Let's say you're currently spending about $60,000 a year on your lifestyle now, but what will it be in 20 years?  You can't just assume CPI increases because (as I now appreciate), there's lot of costs that increase more than the CPI.   

This is the best calculator I've seen

https://www.firecalc.com/

Edited by Marisawright
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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

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2 hours ago, Wanderer Returns said:

I'm wondering just how much you would need to retire these days, if you were single - or a couple. I appreciate it's a 'how long is a piece of string' question, but let's say for the sake of argument that the retiree(s) mortgage is paid off, they aren't renting, and they don't have any other loans or major outgoings. They lead a modest lifestyle, with one overseas holiday a year, and replace their car every 3-5 years. They are retiring at 60, so will be completely self-funded until they reach retirement age. Would $40,000 for a single person, or $60,000 per couple be enough?

If you're talking about right now, you could probably get away with a very low sum. No overseas holidays, everything shut in many parts of the country, domestic trips aren't worth the risk of getting trapped somewhere. Now would appear to be the time to retire on the cheap!

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Also, remember that people live longer...I retired 22 years ago! So, make sure there is money in the bank. And, don't forget the annual insurances, house, car, persons etc...

Cheers, Bobj.

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Posted (edited)
10 hours ago, Wanderer Returns said:

I'm wondering just how much you would need to retire these days, if you were single - or a couple. I appreciate it's a 'how long is a piece of string' question, but let's say for the sake of argument that the retiree(s) mortgage is paid off, they aren't renting, and they don't have any other loans or major outgoings. They lead a modest lifestyle, with one overseas holiday a year, and replace their car every 3-5 years. They are retiring at 60, so will be completely self-funded until they reach retirement age. Would $40,000 for a single person, or $60,000 per couple be enough?

Yes it does obviously depend on a lot of things however this is a very good guide, it is updated for each previous quarter and has a detailed budget breakdown available too (as well as covering for a modest or comfortable retirement): https://www.superannuation.asn.au/resources/retirement-standard 

But the figures you have suggested are not too far away and from my experience the $62,828 for a couple (table below) is pretty close for most, for my higher net worth clients they might target $80,000 - $100,000 but this would tend to be because of their travel intentions. For a lot of clients we will target a tapered income as it's earlier on in retirement that most of the travelling is done. 

Budgets for various households and living standards for those aged around 65
(March quarter 2021, national)

   Modest lifestyle  Comfortable lifestyle
  Single Couple Single Couple
Total per year $28,254 $40,829 $44,412 $62,828
Edited by Andrew from Vista Financial
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Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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Posted (edited)
1 hour ago, Andrew from Vista Financial said:

Yes it does obviously depend on a lot of things however this is a very good guide, it is updated for each previous quarter and has a detailed budget breakdown available too (as well as covering for a modest or comfortable retirement): https://www.superannuation.asn.au/resources/retirement-standard 

You used the word "target" and to me, that's what these numbers feel like:  a guide for people who are going into retirement with an income that's already decided by their circumstances - it gives them a good idea how to budget to live within their means.

By contrast, I think most people who are asking @Wanderer Returns question are thinking of retiring a bit early so they can enjoy more freedom - and they're not thinking of restricting themselves, in fact quite the opposite.  They're aspiring to a retirement where they can do MORE of the things they enjoy, not less. And these figures certainly do not allow for that.

Here's the breakdown:

https://www.superannuation.asn.au/ArticleDocuments/269/2103-ASFA_Retirement_Standard_Budgets.pdf.aspx?Embed=Y

For the "comfortably off" couple, it allows $84 a week for "eating out" - i.e., you can have a meal in a restaurant once a fortnight.  It allows $28 a week for overseas holidays, which means you can have an overseas holiday every 10 years or so.  It allows $9 a week for cinemas, sport and day trips, so that's once a fortnight as well.  And remember, this is for the "comfortably off" retiree ($62,000), not the "modest" one!

 

Edited by Marisawright
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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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Many people have no where near the ASFA target of $545,000 for a single or $640,000 for a couple (quoted from memory).

They are usually ok even if having around $250000 and the full pension in combination. They may get more income than a higher amount of Super and no pension

It is very hard to answer this question as no one knows how long they will live, People may also downsize their homes when they get older too for something smaller and bring in more money.

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Too many variables to give any verging on accuracy. Easy to put a figure on retirement when mobile and well, but come a serious illness savings can be quickly depleted. Aged care another consideration. If owing own home without mortgage , it's possible to live for a couple on at a guess $60.000 a year. Will depend on lifestyle obviously. Things like eating out is expensive in Australia. If for example like camping out will save a small fortune on expensive hotel accommodation.  Like if more a home body, or prefer simply free things like walking, beach , local activities often offered by local council and so forth. A number of Aussies pre corona found moving off shore to retire in places like Bali, brought far more living standard for their dollars. 

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You get by on whatever you have. I won’t be worried once the mortgage is paid off and I certainly won’t be replacing the car every 3-5 years- what a gigantic waste of funds. 

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9 hours ago, HappyHeart said:

You get by on whatever you have. I won’t be worried once the mortgage is paid off and I certainly won’t be replacing the car every 3-5 years- what a gigantic waste of funds. 

We’ve been retired here for 18 years, bought a new SUV  when we came and replaced it 5 years ago. We have driven it lots around eastern Australia and to be honest it was still in good condition when we sold it. My local runaround was 2nd hand when we bought it, and still going strong 16 years later, Hope I’m not jinxing it saying that. I have to add we have only replaced a car when necessary.

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Posted (edited)
10 hours ago, HappyHeart said:

You get by on whatever you have. I won’t be worried once the mortgage is paid off and I certainly won’t be replacing the car every 3-5 years- what a gigantic waste of funds. 

That's what most people end up doing.  However, if that's what you plan, then you're not the kind of person who's going to ask that question.

People who ask "how much do I need to retire" are usually trying to decide whether to retire now or keep working for a few more years. And usually, they're asking because they're looking forward to having fun and enjoying life in retirement, not 'getting by'.  

With the benefit of hindsight, I'd say, "If you have to ask that question, then you're better off working a few more years".  Because if you have a lot of money in super/the bank, then you''d have no doubt.  We've learned that the real cost of living always escalates far more than you thought it would.  The CPI measures only a limited basket of goods so it gives a distorted idea.

We had our last car for 10 years and haven't had a car at all for the last 5 years.  Just bought one and have every intention that it will last as long as we do...

Edited by Marisawright
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Posted (edited)
7 minutes ago, Marisawright said:

That's what most people end up doing.  However, if that's what you plan, then you're not the kind of person who's going to ask that question.

People who ask "how much do I need to retire" are usually trying to decide whether to retire now or keep working for a few more years. And usually, they're asking because they're looking forward to having fun and enjoying life in retirement, not 'getting by'.  

With the benefit of hindsight, I'd say, "If you have to ask that question, then you're better off working a few more years".  Because if you have a lot of money in super/the bank, then you''d have no doubt.  We've learned that the real cost of living always escalates far more than you thought it would.  The CPI measures only a limited basket of goods so it gives a distorted idea.

We had our last car for 10 years and haven't had a car at all for the last 5 years.  Just bought one and have every intention that it will last as long as we do...

I guess much depends on your lifestyle. I checked one of the posted links and I'm already living the 'age pension' life so I reckon we'll be ok. I don't feel like we're just 'getting by'. We're just frugal and don't buy new stuff for the sake of it. 

I think wealth is very subjective. 

Edited by HappyHeart
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Posted (edited)
28 minutes ago, ramot said:

We’ve been retired here for 18 years, bought a new SUV  when we came and replaced it 5 years ago. We have driven it lots around eastern Australia and to be honest it was still in good condition when we sold it. My local runaround was 2nd hand when we bought it, and still going strong 16 years later, Hope I’m not jinxing it saying that. I have to add we have only replaced a car when necessary.

Im driving the same car I bought new 12 years ago. There's absolutely nothing wrong with it. It goes. Thats all I care about. Each to their own but I'd rather spend money elsewhere. 

 

Edited by HappyHeart
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Posted (edited)
32 minutes ago, HappyHeart said:

I guess much depends on your lifestyle. I checked one of the posted links and I'm already living the 'age pension' life so I reckon we'll be ok. I don't feel like we're just 'getting by'. We're just frugal and don't buy new stuff for the sake of it. 

I think wealth is very subjective. 

It is, indeed.   I lived in Sydney's inner suburbs for 30 years, where cafés aren't just a place to have coffee, they're a whole way of life.  Melbourne is much the same.  I guess we picked up the habit from the thousands of Italian and Greek migrants who came to both cities after WWII.  I've missed my friends during lockdowns, but if I'm honest, I've missed my café lifestyle even more!   

For me, it's been a priority to keep that lifestyle in retirement - so that's why the $80 allowance for "eating out" struck me as woefully inadequate.  And my husband, who was always dreaming about a European holiday every year, would be scornful of the allowance for holidays (whereas that wouldn't bother me).  But equally, there are other expenditures on the list which we wouldn't use.  

But I guess that's the whole point.  These articles which say, "x amount will give you a comfortable retirement" are meaningless because everyone has a different idea of what would be 'comfortable". 

Edited by Marisawright
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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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1 hour ago, HappyHeart said:

Im driving the same car I bought new 12 years ago. There's absolutely nothing wrong with it. It goes. Thats all I care about. Each to their own but I'd rather spend money elsewhere. 

 

Me too.  I've no interest in cars whatsoever.  We never had a new car until OH bought himself one when he retired.  I actually prefer driving my old Corolla.

I share the upkeep of our rescued horses with 3 other people.  It would be far too expensive to do it properly on my own.  They are my biggest outgoing and my greatest pleasure. 😁 Them and my dog    .........................  now that I don't have our sons to fuss over.  We would still like to do a bit of travelling but it's certainly not a priority.

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Thanks for the comments everyone, and also for the links to various retirement calculators etc. I've estimated that I should be able to retire in some degree of comfort (based on our needs) when I'm 60 (5.75 years from now, not that anyone's counting), although I might have to stop buying beer and start brewing my own! Apart from overseas trips, we are also pretty frugal. We hardly ever eat out and generally change the car (for another second-hand one) every 5 years or so. You can probably run them for longer here in Australia because of the climate, but the cars I owned in the UK were pretty much on their way to the scrapheap by the time they were 10-12 years old. I agree that people seem to spend a lot more money on cars than they really need to.

As @Marisawright noted, it was a loaded question because I'd really like to stop working before 60 and was wondering if we'd had enough money. The short answer is 'no' if we continue to live in Australia. However, we've been thinking about renting out our house and living in a cheaper country for a few years. The rent would more than cover the mortgage, and the remaining funds would become an income stream along with my UK private pension, which I can get at 55. Regional Italy is top of the list at the moments, as the cost of renting is half of what it would be in Australia. It would also negate that need for overseas holidays because we'd already be there 🙂  Thailand/Malaysia are also possibilities, although I think I might get bored there after a while.

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2 minutes ago, Wanderer Returns said:

Thanks for the comments everyone, and also for the links to various retirement calculators etc. I've estimated that I should be able to retire in some degree of comfort (based on our needs) when I'm 60 (5.75 years from now, not that anyone's counting), although I might have to stop buying beer and start brewing my own! Apart from overseas trips, we are also pretty frugal. We hardly ever eat out and generally change the car (for another second-hand one) every 5 years or so. You can probably run them for longer here in Australia because of the climate, but the cars I owned in the UK were pretty much on their way to the scrapheap by the time they were 10-12 years old. I agree that people seem to spend a lot more money on cars than they really need to.

As @Marisawright noted, it was a loaded question because I'd really like to stop working before 60 and was wondering if we'd had enough money. The short answer is 'no' if we continue to live in Australia. However, we've been thinking about renting out our house and living in a cheaper country for a few years. The rent would more than cover the mortgage, and the remaining funds would become an income stream along with my UK private pension, which I can get at 55. Regional Italy is top of the list at the moments, as the cost of renting is half of what it would be in Australia. It would also negate that need for overseas holidays because we'd already be there 🙂  Thailand/Malaysia are also possibilities, although I think I might get bored there after a while.

I thought you were asking for a friend 😉

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Financial Adviser (FPA Member AFP ®) Specialising in UK Expat Advice and Pension Transfers / AR-322874 /AFSL-234951

SMSF Accredited Adviser / UK SIPP Authorised Adviser 

Director  - Vista Financial Services – www.vistafs.com.au 08 8381 7177

 

Please note that my advice is general advice only and professional financial advice should be sought for your own personal situation.

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1 hour ago, Andrew from Vista Financial said:

I thought you were asking for a friend 😉

Andrew, I can almost see the finish line if I squint hard enough! 😆

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On 26/08/2021 at 06:47, ramot said:

We’ve been retired here for 18 years, bought a new SUV  when we came and replaced it 5 years ago. We have driven it lots around eastern Australia and to be honest it was still in good condition when we sold it. My local runaround was 2nd hand when we bought it, and still going strong 16 years later, Hope I’m not jinxing it saying that. I have to add we have only replaced a car when necessary.

The last three cars I have bought have been new.   The first was in 1991 when we arrived in Australia and it had over 300,000 kms on the clock when I sold it as it was  starting to have breakdowns.   The second I had over 12 years and had 200,000kms on the clock.   It was in brilliant condition, but was a small car bought for city driving and I found my long journeys once I retired not comfortable in it.   Third car is an SUV, 2 years old and will be the last car I own as I am now finding that I hardly go anywhere thanks to covid!   Hope you haven't jinxed it too Ramot!!!

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......Just trying to be helpful so don't shoot me down if my personal views do not coincide with yours! :animal-dog:

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To answer the OP's question though, it is purely a matter of what your personal circumstances are and what you want to spend your money on in retirement, and how much you have in a private pension/superannuation/savings.  Having been retired for 9 years, I have learnt that however much you plan financially, something will always stuff it up.   Think loss of income from bank account interest going through the floor, superannuation losing value, increasing costs of utilities, insurance, rates, food etc, and also the extra medical costs that you will incur as you get older.  Not to mention that you have to employ people to do house maintenance for you as  you are no longer able to do it all yourself.   So any advice I give will be, once you have decided on an annual amount you think you need, add 5 - 10% and cross your fingers!!  

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......Just trying to be helpful so don't shoot me down if my personal views do not coincide with yours! :animal-dog:

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2 minutes ago, Rossmoyne said:

To answer the OP's question though, it is purely a matter of what your personal circumstances are and what you want to spend your money on in retirement, and how much you have in a private pension/superannuation/savings.  Having been retired for 9 years, I have learnt that however much you plan financially, something will always stuff it up.   Think loss of income from bank account interest going through the floor, superannuation losing value, increasing costs of utilities, insurance, rates, food etc, and also the extra medical costs that you will incur as you get older.  Not to mention that you have to employ people to do house maintenance for you as  you are no longer able to do it all yourself.   So any advice I give will be, once you have decided on an annual amount you think you need, add 5 - 10% and cross your fingers!!  

Yup, me too.

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Scot by birth, emigrated 1985 | Aussie husband applied UK spouse visa Jan 2015, granted March 2015, moved to UK May 2015 | Returned to Oz June 2016

"The stranger who comes home does not make himself at home but makes home itself strange." -- Rainer Maria Rilke

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On 27/08/2021 at 02:48, Wanderer Returns said:

Thanks for the comments everyone, and also for the links to various retirement calculators etc. I've estimated that I should be able to retire in some degree of comfort (based on our needs) when I'm 60 (5.75 years from now, not that anyone's counting), although I might have to stop buying beer and start brewing my own! Apart from overseas trips, we are also pretty frugal. We hardly ever eat out and generally change the car (for another second-hand one) every 5 years or so. You can probably run them for longer here in Australia because of the climate, but the cars I owned in the UK were pretty much on their way to the scrapheap by the time they were 10-12 years old. I agree that people seem to spend a lot more money on cars than they really need to.

As @Marisawright noted, it was a loaded question because I'd really like to stop working before 60 and was wondering if we'd had enough money. The short answer is 'no' if we continue to live in Australia. However, we've been thinking about renting out our house and living in a cheaper country for a few years. The rent would more than cover the mortgage, and the remaining funds would become an income stream along with my UK private pension, which I can get at 55. Regional Italy is top of the list at the moments, as the cost of renting is half of what it would be in Australia. It would also negate that need for overseas holidays because we'd already be there 🙂  Thailand/Malaysia are also possibilities, although I think I might get bored there after a while.

Interesting. I have started brewing my own, and have been very impressed at the taste. Seems to taste better in the UK than Australia. Maybe the water? Or maybe the temperature?

I'm of a similar age, and I have to admit that the enthusiasm for work has gone. There are the odd moments I enjoy, but most of it is nonsense. Supporting systems that are past their sell by date, just waiting for them to be replaced. I'd rather be sitting in the garden.

I'll work while there's work there, but won't be disappointed when it's over.

Italy sounds brilliant. I hadn't thought of that before. Is it still possible post brexit? I was thinking of a place in the Perth hills with a main residence and a granny flat. Live in the granny flat and rent the main house to migrants. Provide pick up service and so forth. 

Just a dream atm, but could become reality in a couple of years time.

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Nearly there! Don't drop the ball now guys! Vaccines are weeks away. Stay safe!

 

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On the subject of new cars every 5 years ; I have a 4wd that is 18 years old and has 275,000 kms on the clock. I wanted a new SUV and made inquiries at a couple of car yards. How much for the 4wd? "No, sorry we are not interested" was their answer.

Oh, well, it will last me another 5, or so, years...

Cheers, Bobj.

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I'm still running a Prado that I bought in 99 and it's just broke the 300,000km on the clock. Apart for the usual servicing, brakes etc, the only thing it's needed in all those years is new leads and the clutch twice. The timing belt every 150000 is the most expensive outlay as labour intensive. I'm hoping to get it to 400000 if I don't cash in my chips  first.

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