Take the mystery out of retirement planning

Shirley Liu 26 November 2015 NEWS

retirement-planning

How much money you’ll need to retire in the capital cities of Australia.

It’s a question that is always somewhere in the backs of our minds; how much money do I need for my retirement? Superannuation is a form of saving that we don’t normally pay much attention to. Most non-self managed super funds provide very little information to its customers about how their money is being invested.

The amount of super you need depends on these things:

  1. How long you live.
  2. What type of lifestyle you want.
  3. Future medical costs.

The Association of Superannuation Funds of Australia (ASFA) estimates the lump sum required to live comfortably when retired is $640,000 for a couple. For a single person, the estimate is $545,000.

How much money do I need to retire in Australia's capital cities?

Interestingly, Darwin takes the lead for most expensive capital cities to live in for Australia with an estimated monthly spending of $2,173. In Sydney, the estimated monthly spending is $2,020. Perth follows Sydney as an expensive place to retire with an estimated monthly spending of $2,016. Adelaide is the fourth most expensive city with an estimated monthly spending of $1,947. Brisbane's estimated monthly spending is $1,945. Canberra's estimated monthly spending is $1,919. Melbourne then follows with a monthly spending of $1,886. Hobart’s estimated monthly spending is $1,845, making it the cheapest Australian capital city to live in.

The age you can access your superannuation in Australia is 55. Females have a life expectancy of 86.02 years according to data released by the Australian Government Actuary. Males have a life expectancy of 82.71.

Use the map below

**Note: The figures above refer to singles.

What is superannuation?

Superannuation is a way to save for your retirement. Under the Super Guarantee law, employers must pay 9.5% of your salary into a super fund. This will increase to 12% in the future. A shift towards self-managed super funds (SMSF) has made it the fastest growing super sector in Australia. There are currently more than 550,000 SMSFs and 1.44 million members in Australia. The difference between an SMSF and other super funds is that SMSFs give people complete control of their super fund.

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Should we pay more attention to our supers?

The short answer is yes. A sizable super account will be more beneficial in the long-run. The interaction between superannuation, pensions and tax eligibility is too complex for most Australians to understand. To gain an understanding, many people aged 20-30 have shown a growing demand for SMSF services, Australian Taxation Office (ATO) statistics show.

The cost of living in Australia has significantly increased over the years. Australians need more money when they retire if they are to live comfortably in the capital cities.

ASFA has released the following information about modest and comfortable retirement standards which is current as of November 25th, 2015.

ASFA Retirement Standard Annual living costs Weekly living costs
Couple - modest $34,051 $653
Couple - comfortable $58,784 $1,127
Single - modest $23,662 $454
Single - comfortable $42,861 $822
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How do I maximise my super when I retire?

Once you reach your age of retirement, you can withdraw your super. There are three ways you can withdraw your super:

  1. As a lump sum.
  2. As a retirement income stream through a monthly payment.
  3. A combination of both.

Choosing to take your super as a retirement income stream will benefit you. The money that you leave in the super fund will continue to work for you and earn interest.

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How do I choose the right superfund?

These are key factors that you need to observe when considering the right super fund for you:

  • Fees. The lower the fees, the better.
  • Investment options. Make sure there are options that suit your needs and comfort with risk.
  • Extra benefits. You can make extra contributions to your super fund. Your employer may pay more than 9.5% for certain super funds.
  • Performance. Track the progress of super funds over the last five years to gage a long-term performance outlook rather than looking at a single year’s performance.
  • Insurance. See what cover is available and how much it will cost.
  • Service. Call the fund or browse their website to see what other services they offer.

Compare super funds today

Name Product Past 1 Year Performance Past 5 Year Performance Calculated fees on $50,000 Insurance Included
10.70%
9.84%
$553.00
Death, TPD
Earn a Retirement Bonus of up to $4,800 when you open a new Income account. T&Cs apply.
10.62%
N/A
$348.00
Death, TPD
Earn Velocity Frequent Flyer Points for making contributions to your super. T&Cs apply.
N/A
N/A
$683.00
Death, TPD, Income Protection
Choose between 14 different investment options, including a socially responsible option.
11.08%
10.51%
$421.76
Death, TPD, Income Protection
Enjoy discounted rates on banking products with ME Bank and health cover with GMHBA health insurance.
9.12%
9.43%
$470.56
Death, TPD
Easily access your super account information using the Commonwealth Bank NetBank app and track recent contributions and transactions.
9.63%
8.88%
$535.00
Death, TPD, Income Protection
Socially responsible and ethical investment options available.
7.57%
N/A
$450.00
Death, TPD
Pay no entry, exit or switching fees and enjoy a range of different investment options with QSuper.
10.57%
9.51%
$593.53
Death, TPD, Income Protection
Get access to one-on-one professional advice at no additional cost.
6.70%
7.52%
$662.00
Death, TPD, Income Protection
Choose investment options that align with your personal values.
11.43%
8.76%
$703.00
Death, TPD
Access offers, deals and discounts through the BT Super Benefits Now program.
10.95%
10.41%
$610.00
Death, TPD, Income Protection
Enjoy discounted health insurance with HCF.
8.79%
9.59%
$646.76
Death, TPD
Get fee-free advice on your superannuation as a BUSSQ member. T&Cs apply.
7.41%
7.89%
$601.76
Death, TPD
Receive a complimentary financial planning session with a Suncorp financial planner.
12.50%
11.02%
$621.76
Death, TPD, Salary Continuance
Enjoy discounted rates on banking products with ME Bank.
9.39%
9.93%
$535.88
Death, TPD
Access simple personal advice at no cost.
8.14%
N/A
$678.00
Death, TPD
Gain access to lifestyle offers and benefits on NAB financial products and services.
8.76%
8.81%
$497.60
Death, TPD, Income Protection
Earn rewards and vouchers through the AIA Vitality program.
10.45%
10.14%
$361.00
Death, TPD, Income Protection
A flexible industry super fund for people who work in Australia’s higher education and research sector.

Compare up to 4 providers

Disclaimer: Performance, fees and insurance data is based on each fund's default MySuper product. Where the performance, fees and insurance data for the MySuper fund vary according to the member's age, results for individuals between 40-49 years of age have been shown. This article is general advice. You should consider your own personal circumstances before deciding if a superannuation product is right for you. Superannuation is a long term investment and past performance is not indicative of future performance.

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