How much is enough?


One of the age-old questions asked by those facing retirement is “how much money do I need to ensure that I can live the retirement I have always dreamed of”?



Unfortunately, the answer is not so clear-cut and will depend on a number of factors, including:

  1. What sort of lifestyle would you like to have?
  2. Will you be eligible to receive an age pension from the government?
  3. How long does the money need to last?
  4. What is your appetite for risk when it comes to investing?
  5. Do you wish to leave money for the next generation?

The Association of Superannuation Funds of Australia (ASFA) conducts regular research into the costs of living in retirement. They publish budgets for a “comfortable” and a “modest” retirement lifestyle each quarter.

For the June 2014 quarter, the annual costs of living are:

  Modest lifestyle Comfortable lifestyle
Single $23,363 $42,433
Couple $33,664 $58,128

A modest lifestyle does not require a significant level of additional savings, as the full rate of age pension will almost cover the costs of living. In fact, the ASFA suggests that to fund a modest lifestyle in retirement, assuming all debts have been eliminated, a single person will require savings of around $50,000 while a couple will need to have a lump sum available of around $35,000.

However, if you are more attracted to a comfortable lifestyle in retirement, you will need a lump sum of approximately $430,000 if you are a single person, and $510,000 if you are a couple. Retirees with lump sums approaching these amounts will not be eligible for the full age pension but the estimated lump sums assume access to at least a part age pension.

For those with a more ambitious retirement lifestyle in mind, the budget increases. And as savings increase to fund the desired lifestyle, access to the age pension reduces to a point where the amount of capital required will disqualify you from receiving any age pension.

If your retirement lifestyle budget is such that the age pension is out of reach, you are part of an exclusive group. You are a “self-funded” retiree.

If you are in your early to mid-60s and aspire to being a self-funded retiree, you will need savings of around 15 to 17 times your first year’s retirement income, in order to generate an indexed income stream for life. Putting this in perspective, if you would like an income of $100,000 in your first year of retirement and would like to maintain this on an indexed basis to keep pace with inflation, you will need a lump sum of between $1,500,000 and $1,700,000.

Managing income in retirement is a challenge for many people. Getting the right advice, early enough, is one of the keys to ensuring that you are best placed to realise your retirement dream.



Source | Peter Kelly, Manager – Technical Advice
Centrepoint Alliance

What is Retirement?


All the definitions of “retirement” would indicate that it is a time in life when you have grown too old to continue to work.  In other words, as the farmer would often say, “you are put out to pasture” because you may have outlived your usefulness.


We definitely do not want to think of ourselves as outgrowing our usefulness or growing too old to work. We still want to make a difference and enjoy ourselves during this time.

The meaning of retirement needs to change. In fact, we need to look for a new word which best describe that time in our life where we decide how much and what work we do want to do and how much play we want to indulge in.

Retirement should not been seen as a time when you pack up your old working life and “withdraw from life into seclusion” (which is exactly what retirement meant originally to the French in the 1500s). Now is the time to become active in your life and be in control of the choices about how you wish to live throughout your retirement phase.

Let’s call it “Renaissance”, no not the beginning of a great 14th century revival of art and literature, but a renewal of life, vigor and interest – a new beginning. Yes, it may sound a little “over the top”, but for most people who have worked in excess of 40 years it should be viewed as an opportunity to refresh your life and begin a new and exciting stage.

But to ensure you take full advantage of your “Renaissance”, you have to take control early to ensure that you are ready not only financially, but also physically and mentally.  Don’t leave it to late take stock of your finances, consider your lifestyle and get a health checkup with us or the opportunity for your “Renaissance” might just pass you by.

Source | Mark Teale, Manager – Technical Advice
Centrepoint Alliance