The surprisingly small amount experts now say you need to retire

How much do you need to have saved to be able to retire? It’s the question many of us are asking. The answer, according to a new study, is you need as little as $88,000 as a single person and $111,000 for a couple by the time you reach aged 65. But those figures make a number of assumptions that need to be explored in further detail.

The figures come from the Retirement Spending Levels and Savings Targets report from Super Consumers Australia, an organisation that says it aims to advocate for low- and middle-income people in the super system, and which has partnered with the consumer group CHOICE.

It makes a number of assumptions including that the figures are based on the super savings of a pre-retired person or couple aged 55-59 who own their own home and pay no rent or mortgage repayments, and they are are eligible for the Age Pension. It’s also assumed that each has savings of $25,000 outside of any superannuation.

The figures above are also based on the low spending assumptions of $34,000 a year as a single person, and $48,000 a year as a couple. For medium and high spenders, the amount needed in super savings jumps much higher.

Savings targets for pre-retires aged 55-59

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Source: Super Consumers Australia. Assumes a person or couple owns their own home with no rent or mortgage. Couples living together. Spending levels have been adjusted for inflation based on Australian Bureau of Statistics data on retiree’s spending.

Super Consumers Australia says most Australians are entitled to the Age Pension, a fortnightly retirement income payment depending on your assets and living situation.

The Age Pension is the country’s main income support payment from the Australian Government for those who are eligible and have reached retirement age. Not everyone is entitled to a payment, with eligibility dependent on income and assets tests.

Super Consumers Australia noted that some people may be surprised by the figures required for a low level of spending, but acknowledged those still paying rent will need more in savings.

“For example, someone who is renting and spending a low amount every fortnight in a low-expenditure household would need double the savings to keep pace with a homeowner,” the organisation said.

“Accurate savings targets for retired renters either require them to save a large amount totals [sic], which would be unfair and out of reach for many, or drastically reduce spending which would put them at risk of financial stress.”

Super Consumers Australia Director, Xavier O’Halloran, said the report was aimed at providing a “rule of thumb” for what people need to maintain their living standards when retired.

The organisation admits retirement planning is complex but says many retirees end up spending less than they could. That’s why super funds are now required to do more to help people plan for what they need to spend, under the rules laid down in the Retirement Income Covenant.

Super Consumers Australia’s Retirement Savings Targets aim to give home-owner retirees the confidence to use their retirement savings in the way they want.

“As part of the Retirement Income Covenant, we would expect funds to be using these targets to help members make sense of their retirement income needs,” added Mr O’Halloran.

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