How Much Money Is Required In Australia For Retirement

  • Oct 19, 2018 AEDT
  • Team Kalkine
How Much Money Is Required In Australia For Retirement

Choosing a lifestyle for your retirement is a personal choice, if one wants a lavish lifestyle during the retirement then he/she needs to save/earn more or inherit money. Even for a comfortable lifestyle one has to start thinking now to deliver such lifestyle. The safe bet of an average corpus required to achieve a comfortable retirement is around $1 million to start with and get around 6-8% return on the same to sustain the living throughout the retirement period.

If you have that amount you can have enough options as to when you’re going to retire or semi retire depending upon how much, risk you will take in your retirement years and what you’ll draw out of your savings. It also depends on the pension situations at that time when we head towards the 2040s.

During a retirement lumpsum of $1 million can generate about $1,500 a week while not forgetting that this income will be tax free under the current rules. And also, considering the that the life expectancy of 85 years from the retirement age of 65 year i.e. this income should suffice for 20 years. 

Age      Amount to be earned    Return Corpus at age 65
25 $50,503.00 7% ~ $1 Million
30 $73,601.00 7% ~ $1 Million
35 $108,658.00 7% ~ $1 Million
40 $163,640.00 7% ~ $1 Million
45 $254,469.00 7% ~ $1 Million
50 $418,220.00 7% ~ $1 Million
55 $765,868.00 7% ~ $1 Million

Table: How much you need to earn to retire with $1 million

So, the sooner you start the better it is, as these funds can be impacted by the rate of return you get the fees charged and inflation. The effect of inflation in a high inflation period can be devastating which is fortunately low in the current period.

One way is to earn through a superannuation fund but pension at that time is expected to earn only 3% and for those starting to save later it can become a huge concern to reach the desired level of corpus. This means Australians have to do more than just relying on compulsory employer contributions of 9.25% or investments beyond the superannuation funds should be used.

For this there are few dividend stocks, as only some companies pay dividends while others decide to reinvest the money. As at October 2018, some of the high paying dividends stocks which can help you achieve the same amount of return i.e. 6-8% on the savings and get you closer to the $1 million retirement fund are as follows:

Name  ASX Code PE Div. Yield (%)
National Australia Bank Ltd NAB.AX 13.220 7.69
AMP Ltd AMP.AX 17.610 7.73
Cromwell Property Group CMW.AX 9.420 7.86
Sigma Healthcare Ltd SIG.AX 13.690 6.96
IOOF Holdings Ltd IFL.AX 30.040 6.81
Westpac Banking Corp WBC.AX 10.900 7.04
Bank of Queensland Ltd BOQ.AX 12.350 7.2
Perpetual Ltd PPT.AX 11.740 7.68
Bendigo and Adelaide Bank Ltd BEN.AX 11.420 6.82

Dividends are a steady income supply from a long-term profitable company but finding your retirement number only starts with a retirement budget. Planning for unexpected expenses and the money you owe as debt is also equally important. As the money you will receive also depends on the assets you own and the funds you have for retirement or any other form of income.

Dividend Stocks To Buy

The Income available from dividends remains attractive for many investors.

We take a look at the best yields on the market and assess what they say about a company’s prospect.

One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”

ASX-relevant Special Reports are published year-round to provide a detailed analysis into an investing opportunity or a potential risk to your portfolio.

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Disclaimer

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There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

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