Comfortable or modest lifestyle – what will you aim for?
05 May 2021
As you start thinking about life after work, you’ll no doubt be asked what kind of lifestyle you’re hoping to enjoy. Do you want a comfortable or modest lifestyle and do you have enough in your superannuation nest egg for a comfortable lifestyle?
To help people budget and plan for life after work ASFA (The Association of Superannuation Funds of Australia) put together a detailed explanation of what a comfortable lifestyle looks like and how this compares to a modest lifestyle and a lifestyle relying solely on the Age Pension.
What do these lifestyles look like?
With a comfortable lifestyle you’ll enjoy a good standard of living with a reasonable car, good clothes, a range of electronic equipment and holidays.
A modest lifestyle on the other hand is better than living on the Age Pension, but only allows for basic activities and expenses.
Here are some examples of what the different lifestyles can afford vs living off the Age Pension.
| Comfortable lifestyle | Modest lifestyle | Age Pension | |
|---|---|---|---|
| Leisure activities | Regularly take part in a range of activities | One occasional activity e.g. a trip to the cinema |
Only no cost or very low cost activities, e.g. rarely visit the cinema |
| Holidays | Holidays in Australia and occasional overseas holidays | One holiday a year in Australia or a few short breaks | Even shorter breaks or day trips in your own city |
| Health insurance | Top level private health insurance | Basic private health insurance, limited gap payments | No private health insurance |
| Electricity | Can run air conditioning | Need to watch utility costs |
Less heating in winter |
| Clothing | Good clothes | Reasonable clothes | Basic clothes |
| Home repairs and renovations |
Home repairs and updates. Replace kitchen and bathroom over 20 years | Limited budget for home repairs and household appliances |
Struggle to pay for repairs like a leaky roof |
More information on what these lifestyles look like is available from ASFA.
What will it cost?
The amount you’ll need each year depends on whether you’re single or in a couple and on the lifestyle you’d like to enjoy when you finish working. The current budget needed to fund a comfortable and modest lifestyle compared to the current Age Pension is below.
| Comfortable lifestyle# |
Modest lifestyle# |
Age Pension^ |
||||
|---|---|---|---|---|---|---|
| Single | Couple | Single | Couple | Single | Couple | |
| Budget needed per year | $50,004 | $70,482 | $31,785 | $45,808 | $27,664 | $41,704 |
These figures assume you own your residential home outright and are relatively healthy#.
How much will you need in super?
To enjoy a comfortable or modest lifestyle when you finish work you will need money in your super account.
The amount you need in super varies greatly between the two lifestyles and this is because the Age Pension payments (including the various supplements) are enough to cover most costs if you’re living a modest lifestyle.
| Comfortable lifestyle# |
Modest lifestyle# |
|||
|---|---|---|---|---|
| Single | Couple | Single | Couple | |
| Super balance needed* | $595,000 | $690,000 | $100,000 | $100,000 |
These figures assume you will draw down all your capital and receive a part Age Pension*
Get your super on track to achieve the lifestyle you want
If you need help getting your super on track to achieve the lifestyle you’d like, we’re here to help. Give our team a call on 1800 692 877.
# Sourced from ASFA Retirement Standard at www.superannuation.asn.au/resources/retirement-standard as at 3-7-2022. ^ Age Pension figures sourced from www.servicesaustralia.gov.au/individuals/services/centrelink/age-pension/how-much-you-can-get include the maximum pension supplement and the energy supplement. * Sourced from ASFA Retirement Standard at https://www.superannuation.asn.au/ArticleDocuments/269/2108-ASFA-Retirement_Standard-Summary.pdf.aspx?Embed=Y. Information correct at 22 June 2022 and is subject to change. For current figures refer to the sources above. This information is general advice only and does not take into account or consider your personal objectives, financial situation or needs. Before acting, you should review the relevant Product Disclosure Statement to ensure you have all the information about the BUSSQ product and how it works and consider the appropriateness of the information to your needs or seek independent advice from a properly qualified professional. Prepared by BUSS (Queensland) Pty Ltd (ABN 15 065 081 281, AFSL 237860) as Trustee for BUSSQ (BUSSQ Fund, ABN 85 571 332 201).