Can you afford to retire?

Afford the retirement you deserve.

Some simply calculate their current expenses and expect they will need about the same to live on once they retire, others believe they can live on about 65% of their working income. These perspectives depend on different assumptions. In the first case, the amount estimates the same needs every year, while the second expects lower expenses.

Now onto the third, and most ideal, scenario – retiring with comfort, that is needs and wants. And since this is why we hopefuls are here, here is your guide on how to afford the retirement you deserve.

A glimpse in a single’s retirement:

Untitled Report

A couple’s comfortable lifestyle is supported by around $510,000, assuming you’re receiving a partial Age Pension. Use these retirement calculators to predict your needs based on cost of living in various locations. Of course your lifestyle, health and life span are to be accounted into the equation.

  • Accumulations, accumulations, accumulations!

Break down your future budget and calculate your accumulations considering these factors – retirement age, frequency and amount of savings additions, the rate of earnings on your investments, and the impact of income taxes.

  • Basic living expenses 

Basic living expenses = Routine necessities = (Expected housing costs + Average monthly utilities + Food + Clothing + Transportation + Insurance + Cable + Internet

  • Extra expenses

New interests or hobbies + Club memberships + Health fund + Leisure activities with grandchildren

  • Travel expenses

You have all the free time you’ve always dreamed about! How often do you plan on travelling? Where to? Be as specific in your estimates as you can.

  • Impact of inflation

Inflation is what kills the value of your hard earned money in the bank. Most online retirement calculators compensate for inflation, but in case you want to do the math yourself, multiply your annual need by the rate of inflation, and raise the product to the number of years to your retirement. The volatility of inflation is hard to predict, but experts see and average inflation rate between 2% and 3%. The general rule is the higher the actual inflation, the more income needed to equal the purchasing power of today.

  • Your current superannuation strategy

There is always room for improvement. Assess your current strategy, and if you can, maximise your existing superannuation as it offers more than what you think – shares, cash, property investments, managed funds, bonds, warrants, collectibles. Another way, aside from investing, is by boosting your super with additional voluntary contributions (salary sacrificing). If your calculations still fall short of your goal savings, you can use a transition to retirement strategy (TRAP), which allows you to work part-time past your retiring age. If you predict a longer retirement you would need more, if shorter, less.

No matter what numbers show in your final calculations, do not panic. Stick to your goals. It is never too late – or too early – to plan for your retirement. Building your retirement fund is a matter of habit and discipline. Save as much as you can, choose to consume less (but not too much, as there are activities you can only do in your younger years), and invest wisely.

 

Tools:

Budget Planner

Superannuation calculator

Retirement Planner

Super contributions optimiser

Super co-contribution calculator

Employer contributions calculator

Super and pension age calculator

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