Is there really a “magic number” for retirement savings?

When it comes to how much money you’ll need in retirement, it can feel like you’re drowning in a sea of figures — each claiming to be the elusive “magic number.”

According to the latest ASFA Retirement Standard, couples aged around 65 need $75,319 per year to enjoy a comfortable lifestyle, while singles require $53,289.

But ask everyday Australians and the target shoots much higher. A recent global survey by Dynata, commissioned by AMP, found that Australians believe they’ll need at least $1.25 million tucked away before they can feel truly secure once the paychecks stop. That’s a striking contrast — and a sign of just how high the bar has been set compared to the rest of the world.

So, is there really a single figure we should all be chasing? Or is focusing on a “magic number” actually a mistake?

Certified Financial Planner Michael Sauer says putting too much weight on one target figure can be misleading, “because people only get fixated on the amount of super they need to retire.”

“However, this is only one part of the equation,” he adds.

Instead, he says retirees (and those approaching retirement) should be asking themselves:

• How much they want to spend each year.
• Estimate how long their retirement will go for.
• Determine if they want to spend all of their money or leave some for the kids.
• Determine if they have other sources of money to come in such as via downsizing or inheritances.

Once you’ve worked out these big-picture goals, the next step is making sure your super is set up to support them.

Chris Brycki, Founder and CEO of Stockspot, suggests three strategies to help boost your balance:

• Start where you can – Even modest contributions or investments add up over time. Setting aside a little extra—even if it feels small—can grow into a meaningful boost by retirement.
• Keep an eye on fees – Super fees vary widely between funds, and high charges can quietly eat away at savings.
• Look for growth as well as income – When choosing investments, focus not only on steady returns like dividends but also on options that grow in value over time. This balance can help protect and grow your nest egg.

Although we may be bombarded with talk of a “magic number” to ensure a comfortable retirement, what really matters is the type of lifestyle you want in retirement and taking the necessary steps to ensure you are set up financially to achieve it.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.