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How comfortable can you afford to be in retirement?
Not everyone can afford a comfortable retirement - but when you understand how your income is layered, and how your expenses can be managed through budgeting you can at least do your best.
It’s Sunday again. And this week I’m bringing a big voice to a big issue across my major newpaper column in the Nine Newspapers, and on my podcast, Prime Time (with Bec Wilson).
So it’s a simple newsletter today with one big message. Most people planning well in advance of retirement can budget for ways to live in comfort - you just need to understand the process of planning for retirement effectively. So in both the column and the podcast, I do a deeper dive. A comfortable retirement is something I wish everyone could have.
In this edition
Today’s SMH/Age article: How much do we really need to retire in comfort
Prime Time Podcast: How much do you really need to retire in comfort and making sense of your super
Order your signed copy of How to Have an Epic Retirement, the book - in time for a Christmas gift
Budgeting tool: Access to our free, updated excel budgeting tool, discussed at length in the podcast and the book.
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How much do you really need to live in comfort?
Every Sunday I write a column that is published in the money section of The Age, The Sydney Morning Herald, Brisbane Times and WA Today. And our community asked that I send it out the day it goes to print. So, this week’s column can be read in full here.
As you look forward to full-time or part-time retirement in your future, there’s a massive question most people need answered to build up their confidence to set a retirement date: how much money do you really need to retire in comfort? It seems like such a simple question, surely it has a simple answer. Well, it does – sort of.
The Association of Superfunds Australia (ASFA) releases their retirement cost of living benchmarking quarterly. The latest numbers say that single people who will be eligible for the age pension, and own their own home outright will need an annual income of $50,207, while couples will need $70,806 to afford a comfortable retirement.
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Assuming a lifespan of 88, they say that single people need to have a superannuation balance of $595,000 and couples will have to have a balance of $690,000 when they retire.
These comfortable retirement budgets assume a certain standard of living that most people want to be able to afford, but certainly not everyone will be able to. It expects that you’ll have a lifestyle that includes the purchase of comprehensive health insurance, owning your own reasonable quality car, and can afford to buy fashionable clothing and footwear fairly regularly.
It also assumes that you will want to run air conditioning for heating and cooling. It budgets for you to take one domestic holiday to visit family per year and a simple international holiday every seven years. And it affords enough for you to participate actively in leisure activities like going to the club or the movies.
It does not offer you enough money to take regular holidays, undertake sizable home renovations or maintain and upgrade a fancy new car, allowing only for modest renovations every 20 years. And it certainly does not allow for rent payments, although if you are eligible for a part-pension you will also be able to qualify for rent assistance which will offer some support. Nor does it accommodate the payment of significant body corporate fees.
This article continues on the Sydney Morning Herald website here. It’s usually free to access the article - you may need to register.
Podcast: How much do you really need to retire in comfort and making sense of your super
If you're heading toward the next phase of your life, you've probably asked yourself this big question: How much money do I really need to retire comfortably? Today I tackle it head on. Is there a magic number? Will I ever be able to quit my job or start stepping back from full time work? How do I work it all out for myself?
This week I have invited radio personality and weekends presenter at 4BC 882, Spencer Howson back onto the show to chat about money with me, and help me break down this big and important topic. With Spencer’s help I take a deep dive into how to plan for your retirement and build your own set of numbers, explaining how to build a vision for your retirement years and then calculate your numbers against that vision. He’s a blessing in disguise, making this tough topic much more relatable.
LISTEN HERE - LATEST EDITION (S1E5) - OMNY
or listen on APPLE PODCASTS
Understand how much money you need to spend each year on living expenses to have a comfortable retirement, based on the benchmarks, so you can start to explore your own needs and wants, and understand what you can afford to dream about.
Consider how much you need to have in your superannuation account before you retire to generate a comfortable retirement income.
Learn the fundamentals of how your superannuation works, and what you need to be paying attention to to maximise your compound investment goals over the years before retirement, and in the years after it.
Find out the formula to help us build out our own budgets.
Explore the things that can change or impact our retirement planning in the economy that we don’t have much control over, and how we can manage them.
Understand when you might want to get the help of a financial adviser.
This is one of those topics where there’s no ‘right answer’ only your answer, so I feel it’s important to give you the formulas and tools so you can take the time to work through it yourself.
Many thanks to Spencer for being such a great friend of the show and helping us navigate the tricky topics in a friendly and relatable way. I hope you enjoy his company as much as I do!
So, go now and have a listen! And please, consider leaving us a rating and a review - and sharing the podcast with your friends! ★★★★★ It’s hard to believe but our Prime Time podcast has been making it into Apple’s top 100 each week so far - and that’s because of you, our wonderful community! Thanks for getting behind it.
Buy an inscribed copy of Epic Retirement for a Christmas gift (or for yourself)
This is the ultimate guidebook for a modern retirement, and if you love it, surely your friends will too. At popular request, we’ve set up an online store so you can order a signed, personally inscribed copy as a gift. Check it out here and get in while stocks last.
The book walks you (or your loved one or friend) through the six key pillars that matter most as you approach retirement, the biggest life change you’ve every navigated so far. It is designed to provide structure, build confidence, and ignite excitement across each of the six areas: time, money, health, happiness & fulfilment, travel and your home.
Access to our free Epic Retirement excel budgeting template
It is very hard to work out how much you need to retire in comfort without doing a comprehensive cost of living budget. I have built this powerful little budgeting spreadsheet (recently updated), the use of which is explained in-depth in How to Have an Epic Retirement - the book, and discussed in this week’s edition of the Prime Time Podcast.
You can download the template here. It’s worth about $169 in real money - but I am giving it to you for free - please use it to prepare to make your retirement as comfortable as you can: https://epicretirement.com.au/budget/
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THE IMPORTANT STUFF: The information provided in this article, newsletter and podcast about pre-retirement and retirement is intended to be general advice and for educational purposes only. It is not personalised financial, investment, or legal advice and Bec Wilson is not a financial adviser. The content presented is based on facts, research and our understanding of current laws and regulations, which may change over time. We recommend consulting with a qualified financial advisor, accountant, or legal professional before making any financial or retirement-related decisions. We make no representations or warranties of any kind, express or implied, regarding the accuracy, completeness, reliability, or suitability of the information shared. Listeners are solely responsible for their own actions and decisions based on the information provided in this podcast.