It’s a hotly debated topic with many people wondering how much they really need to retire comfortably.
Inflation has been in the news lately, so what impact has it had on your retirement savings and super?
“Inflation does have an impact on the amount of savings people will need in retirement,” says Xavier O’Halloran, director of Super Consumers Australia. “Many retirement savings targets are updated based on inflation, including ours, which are updated twice yearly.”
Their most recent figures come from March 2022.
If you were living by alone, it’s estimated that each fortnight you’ll need access to:
- $1,308 for a lower standard of living
- $1,692 for a comfortable standard of living
- $2,115 for a high standard of living
Couples are estimated to need the following each fortnight:
- $1846 for a lower standard of living
- $2462 for a comfortable standard of living
- $3115 for a high standard of living
“A major component of most people’s retirement income is the age pension, which is also increased up to twice a year to cover cost of living inflation increases,” says Mr O’Halloran
The next increase is due on September 20, and Super Consumers Australia will update their targets a short time after that to factor in both the pension increase and also inflation using the June CPI figures.
Falling behind on your retirement savings? Here’s how you can catch up
If you don’t feel you’re going to have enough saved there are steps you can take to ensure you catch up.
“First check the fundamentals of your super fund, such as whether it’s a high-performing fund with low fees.”
He also recommends making additional contributions to your super on top of employer contributions. You can do this in the form of salary sacrifice. There may be tax incentives by doing so. It’s worth double-checking with the ATO and your super fund to make sure.
He notes that there are also government schemes for people who are worried about their savings.
“The home equity access scheme allows Australians of pension age who meet certain eligibility criteria to borrow money (non-taxable) from the government using the equity in their home as security.
“There is also the home downsizer contribution, which allows Australians over 60 who meet the criteria to contribute up to $300,000 of the proceeds of the sale of their house into their super.”
Read more of our savings tips to help beat inflation and save for your retirement.