New research sheds light on how to target savings for retirement plans
The latest research from the superannuation sector, Super Consumers Australia, proved how hard it is for Australians to save for a secure retirement, the nine.com.au reported. Learn about the recent data that HR could use as a springboard to talk to their employees about targeted savings and their retirement plans.
The superannuation sector said that the savings target was based on: age, whether you are single or in a couple, and how much you want to spend when you are retired.
“Based on these three things, the savings targets give you a starting point on how much to save in order to sustain your desired standard of living - so long as you own your own home outright, or you otherwise aren’t paying rent or a mortgage,” the Super Consumers Australia said.
Retirement savings target
According to the group, the estimations are based on pre-retirees aged 55-59 and categorized according to low, medium, and high spending levels during retirement.
Based on the research, a single retiree who spends $2115 each fortnight is considered a high spender, $1,692 for medium spenders, and $1,308 for low spenders.
When it came to couples, Super Consumers Australia said that those who spend $3,115 each fortnight are considered high spenders, $2,462 for medium spenders, and $1,846 for low spenders.
Low-spending individuals, according to the superannuation sector, need to save $745,000 by the time they reach 65 years old to sustain their desired standard of living. In contrast, medium spenders need over $300,000, and low spenders need $88,000.
Meanwhile, high-spending couples need just over $1mil in the bank, medium-spending couples with over $400,00, and low-spending couples with over $100,000 to maintain their standard of living throughout their retirement, according to Super Consumers Australia.
Super Consumers Australia Director Xavier O’Halloran said that new retirement savings targets would help Australians resolve how much they need to save and what income those savings will deliver in retirement.
“These new retirement targets are designed to help people answer these questions,” O’Halloran said. “They provide a solid ‘rule of thumb’ for what is needed to maintain your living standards when you’re retired.”
Superannuation industry
According to O’Halloran, the superannuation sector based the new savings target on what people spend in retirement with a buffer built in to provide confidence that people’s savings can weather the type of market volatility that many are currently experiencing.
The director further said that having credible targets based on actual spending meant that people could confidently spend and enjoy their retirement.
“These targets come at a time when the superannuation industry is grappling with the needs of consumers who are approaching retirement,” O’Halloran said. “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.”
