When thinking about retirement, we don’t tend to think about our super balance. Instead, we think about a lifestyle we want in retirement and translate this into how much cash we will need per week, month or year to live this lifestyle.

A good place to start is to think about the amount of money that we typically spend and break this down into essential needs (such as food, clothing, utilities), preferences (such as holidays, travel, eating out frequently) and nice to haves (such as a boat or holiday home). Thankfully we can take-out work-related expenses and hopefully children’s education costs.

As a rough guide, ASFA has taken into consideration these potential living expenses, excluding rental costs and calculated two retirement categories of ‘Comfortable’ and ‘Modest’. While your individual circumstances and needs may differ considerably it helps to put into perspective the overly-alarming $1 million figure.

So what can I do to improve my retirement?

While the Age Pension is one thing to consider, here are some other things you could think about to help you to a better retirement:

• Remember, small amounts of super go a long way. Can you increase your super contributions as much as possible when working? Generally, salary sacrificing superannuation, by making before-tax super contributions, is a popular strategy provided you don’t go over the super contribution caps.
• Your assets outside super – this will give you a clearer picture on your eligibility for the Age Pension through the Assets Test.
• Consider part-time work

What can I do now?

So, do you need $1 million in retirement? Not necessarily, it depends on your lifestyle goals and your assets outside of super.

Our financial advisers can help you review your expectations of retirement and build this into your retirement plan, whether retirement is years away or around the corner.

The information contained in this article is general information and it has been prepared without considering your individual objectives, financial situation or needs. Because of this, you should, before acting on this information, consider the appropriateness, having regard to your objectives financial situation or needs.