Even if you feel you haven’t saved enough for retirement, you have at least one thing working for you: you control how you spend your time after work.
The Retirement Incomes Report shows Australians overestimate how much retirement money they’ll need to live comfortably. Those polled said they sought approximately $56,000 annually to have a secure retirement. The reality, though, is they only use about $40,000 of that each year and then only $30,000 in the decade after they retire.
The discrepancy between anticipated and actual needed income could be attributed to Australians not actually planning out how they hope to spend their golden years. While you may think in the back of your mind you’ll go sailing around the world for years after your retirement, the reality might be you head to a cabin in the country with your knitting and books. Obviously, the second option costs much less than the first one.
You’ll most likely feel more secure about your savings if you figure out your realistic goals for the years after work ends. Some of the initial questions are simple: where will you want to live (local, out of state, abroad); will you sell any property; how will you get around (car, public transport, boat). Also consider whether you’ll ever see yourself generating income again. Even if you don’t think you’ll return to a full-time job, you may want do part-time work to keep busy or start a side business.
After you’ve worked out your main needs, you can factor in your leisure activities. Be true to yourself – maybe you want to sign up for cooking classes, learn to tap dance or finally finish that quilt you started 20 years ago. You might want to join clubs or spend quality time with your spouse or family. If you intend to travel, how long will your trip last and where will you go?
When you’ve decided what you want to do in retirement, estimate how much your lifestyle will cost (don’t forget to include your monthly bills and expenses). You can hop on the Commonwealth Bank Budget Planner to figure out the annual income you’ll need to fund your retirement. Use this amount as a base to determine how much more you might need to save to achieve your total retirement funds.