Is $1.6m enough for a comfortable retirement?

A recent survey by Colonial First State (CFS) has highlighted the disparity between what Australians believe they need for a comfortable retirement and the figures suggested by the Association of Superannuation Funds of Australia (ASFA). While ASFA estimates that $690,000 is sufficient for a couple and $595,000 for a single retiree, the survey respondents believe they need a substantial $1.6 million.

The CFS survey, which canvassed over 2,200 retirees, revealed varied personal definitions of comfort in retirement. Responses ranged from basic needs like food, petrol, and housing, to desires for regular dining out, domestic travel, and overseas trips every few years without financial stress. This diversity in expectations shows the subjective nature of what constitutes a 'comfortable retirement'.

Despite the fear of running out of money being a common concern - reported by half of the survey's participants - 80% expressed confidence in managing their retirement funds. This confidence persists even as Australian life expectancy increases, with current figures standing at 81.2 years for men and 85.3 years for women.

Interestingly, 70% of respondents are enjoying their retirement with the savings they have, demonstrating a degree of financial resilience.

The survey also sheds light on retirement triggers, with 66% of Australians retiring due to health issues or redundancy, rather than a desire to stop working. Most respondents prefer reducing work hours or engaging in less demanding jobs that allow time for passion projects.

Deloitte Australia’s actuarial consulting partner, Andrew Boal, pointed out that while financial planning is crucial, the non-financial aspects of retirement, such as health, social connections, and living a purposeful life, are equally important and often overlooked. This broader view of retirement planning is essential for achieving a truly comfortable and fulfilling retirement.