If you're wanting an early retirement, you'll need to have your superannuation in order.
But just how much super would be required if you wanted to retire at 55?
Well, a lot depends on the type of retirement lifestyle that you want.
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Retiring at 55
Firstly, let's look at how much money you would need to be able to spend to fund your lifestyle of choice.
According to AFSA, for singles, if you plan to live somewhat frugally, you will need approximately $32,000 each year for a modest lifestyle. AFSA describes this lifestyle as:
A modest retirement lifestyle is considered better than the Age Pension, but still only allows for the basics.
Whereas if you want a comfortable lifestyle, you'll be looking at $51,000 each year according to AFSA. This lifestyle is described as follows:
A comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as; household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.
For couples, you would be looking at approximately $46,000 for a modest lifestyle and $71,000 for a comfortable lifestyle.
How much superannuation would you need?
In order to fund these lifestyles, you will need the following (inclusive of pension):
Comfortable retirement:
- Singles $595,000
- Couples $690,000
Modest retirement:
- Singles $100,000
- Couples $100,000
AFSA highlights that the same superannuation is required for both couples and singles for a modest retirement due to the impact of receiving the Age Pension.
So, if you're 55, married, and have a combined superannuation of $690,000, AFSA believes you could hand in your retirement notice on Monday and live a comfortable life.
However, it is worth noting that couples aged between 55-59 years old have on average a combined superannuation balance of $552,987.
While it is too late for them to retire early and comfortably, it might not be for younger Australians.
For example, if you're in your 40s you could potentially get to the desired amount by the time you're 55 if you make additional contributions to your super. The key is to plan ahead and adjust your contributions accordingly.
