How Much Will You Need to Retire Comfortably?

As a ‘general rule’, here at Pillar we suggest that most of our clients should aim to retire on roughly 50% of their current household income, assuming they carry no personal debt into retirement.

Regardless, preparing for retirement is crucial for enjoying this significant life stage to the fullest. Thoughtful planning is essential, regardless of how close or far retirement may be. Here are concise steps to guide your retirement planning:

  1. Set clear retirement goals: Determine the lifestyle, duration, and activities you desire during retirement to start working towards achieving them.
  2. Choose a benchmark retirement age: Consider not only your preferred retirement age but also the possibility of living longer and needing funds beyond the average retirement age.
  3. Assess changes in spending: Understand how your spending patterns will change in retirement, enabling you to calculate the income required for a comfortable retirement.
  4. Calculate retirement funds needed: Estimate your retirement expenses, including any additional goals like paying off a mortgage or traveling, to figure out the necessary income-generating assets.
  5. Account for additional income sources: If you plan to work part-time or expect other sources of income, incorporate them into your retirement plan to reduce the reliance on investment income.
  6. Choose retirement investment accounts: Decide on the investment options that suit your needs and risk profile, considering factors like age and financial situation.
  7. Start saving early: Begin saving for retirement as soon as possible, utilising salary sacrifice into your super fund and investing in financial assets.

Regarding a safety net:In Australia, there are compulsory superannuation payments and the age pension available for income support during retirement.

Depending on income and assets, pension entitlements may vary, emphasising the importance of personal retirement planning to avoid relying solely on the pension.

By planning ahead and taking proactive steps, you can shape your retirement to be enjoyable and stress-free, ensuring a fulfilling post-work life.