Do you need $1 million to retire, or is the number $2 million or $3 million?

It’s a scary discussion, we have it weekly with people. For many Australians, the rule of thumb number is that $1 million should deliver them a comfortable retirement. But that depends…

If you look at the Association of Australia (ASFA) Retirement Standard, it offers two capital values – $595,000 in savings at age 67 and $690,000 for a couple. Which is it?

So, it is hardly surprising that most people are perplexed. If we start with the ASFA numbers, a few assumptions need to be factored in;

• It assumes you own your home outright
• It assumes that, at some point, you are going to access the Government Aged Pension
• It assumes you are in reasonable health and not suffering from any chronic health issues, given it makes no provision for associated health expenses going forward

The ASFA standard works on a budget of $51,814 for a single person between 65 and 84 years of age, and $73,031 for a couple. You should look at these numbers and ask yourself whether you could live off this based on your lifestyle needs.

Additionally, renting is a whole different ballgame. These days, the median rent in capital cities is around $700 per week, so add that to the mix, and you’re paying $36,000 per annum.

There are also a raft of other considerations to take into account, including how you might wish to spend your time, your individualised health and care, and whether you need to be in a position to offer assistance to parents and children. This is before we get to the aged-care considerations.

The reality is that everyone’s situation is different. People have individualised lifestyle pursuits. Some travel and want to travel, others don’t. The retirement planning equation is an individual-tailored exercise and needs to be approached that way. The earlier you can conduct this exercise with people qualified in this planning, the better. And leaving matters 6 months to 12 months before your retirement isn’t maximising your probability of achieving the best outcome.

At Future Gen Solutions, we help protect what you’ve worked hard to build, ensuring you can enjoy retirement on your terms. We help you create financial certainty for the future, for your loved ones and for future generations.