How much do you need to retire in The Hills?
Are you thinking about retiring soon but don’t feel you can afford to? The good news is, as long as you don’t want to travel overseas for extended periods or buy a top-of-the-range new car, you can retire on much less than most super funds say. In this article, I run through how much you need, what you’re entitled to and how to make the most of what you have.
Disclaimer: While I’m aged care accredited, I am not a financial adviser. Use the following information as a guide but you should consider your personal circumstances and seek the advice of a financial advice professional.
How much do you need to live comfortably?
If you read the superannuation fund blogs, they’ll tell you you need at least $1 million in super to afford a comfortable retirement. However, it depends on your assessment of ‘comfortable’. Maybe if you’ve been used to the high life, you’ll need $1 milion but (depending on your assets) you can retire even if your superannuation is as little as $253,000 (according to Money magazine). That figure is for homeowners, however.
How to retire on super of just $250,000
Look, I’m going to be upfront here: you won’t be rolling in money. However, you can live modestly if you own your home and don’t have huge expenses on the horizon.
Say you have assets of $15,000 (including shares, your car and your home contents). Under the rules, you could receive the maximum fortnightly Age Pension of $1,096.70 or $28,514.20 a year.
If you convert your $250,000 of super to an Account Based Pension, you could choose an income of, say, $14,000 a year. (To receive $14,000 a year, with an initial super balance of $250,000, your super will last until you’re 91 years of age.)
Age Pension: $28,514.00
Account Based Super income: $14,000.00
Total annual income: $42,514.00
As you can see above, your Account Based Pension combined with the Age Pension gives you an income of $42,514 a year. Yes, it is a relatively modest income but if your goal is to retire and take it easy, that amount is enough to give you a domestic holiday each year (or a budget overseas holiday), eat out occasionally, and enjoy activities like theatre, sports and more.
You can check various online calculators (like this calculator from Noel Whittaker) to see how much Age Pension per fortnight you should receive. However, you should take advantage of a Financial Information Services Officer through Services Australia. I’ve heard from various clients they’re extremely helpful.
You can check how long your super will last with this Account Based Pension calculator from the government MoneySmart website.
Can I afford to live in a retirement village on $42k a year?
In general, yes, you can. However, each village operates differently with different cost structures. If you are considering moving into a retirement village soon, let me help you choose the retirement village that’s right for you and your future needs.
Can I help you with your retirement village planning?
I’ve lived and worked in The Hills for most of my life. With my network of real estate, retirement village and financial contacts, I can guide you to the next steps you need to take to achieve your life goals. If you’re unsure of how much you need to move to a retirement village or into aged care, I can help.
Should one of these steps include selling your family home, talk to me. I can help you sell your home or recommend an agent while I act as your seller’s advocate.
