Calculating how much super you will need will help you decide whether you should be contributing more to your super. You can utilise salary sacrifice schemes to increase contributions, especially if you are not using your entire salary.
There are two main factors that impact the amount of super you will need when you retire:
Costs in retirement
Consider the major costs that you will need to continue paying during retirement. Examples include:
- Paying off your mortgage
- Renovating your income
- Medical costs
Estimate how much money you will be needing for each of the aspects that apply to you. Make sure that your estimations are as realistic as possible. Some things, such as medical costs, may be difficult to accurately estimate, so try to keep a higher margin.
The lifestyle you want
Think about what sort of lifestyle you want once you retire and consider how much money that will require. The Association of Superannuation Funds of Australia provides an estimation of how much money you will need depending on what sort of lifestyle you want:
- Single and modest lifestyle: $27,987 a year
- Single and comfortable lifestyle: $43,901 a year
- Couple and modest lifestyle: $40,440 a year
- Couple and comfortable lifestyle: $ 62,083 a year
These are estimations and the numbers may be different depending on your circumstances and lifestyle.