Australians need $1.6m for comfortable retirement: Survey

Australians believe they need $1.6 million to be financially comfortable in retirement, a new survey from Colonial First State (CFS) finds, but they cannot agree on what living comfortably looks like.

This is well above Association of Superannuation Funds of Australia's (ASFA) calculation of $690,000 that it says is needed for retired couples to live in comfort and $595,000 for a single retiree.

More than 2200 retirees canvassed by CFS in its Rethinking retirement report found that they have different definitions of what comfortable looks like.

One respondent said this is "food, petrol and a roof over my head" while another said, "not having to worry about everyday livings costs and energy bills, being able to eat out once a week and travel in Australia in our caravan."

For another, comfortable meant "having enough money to take an overseas trip every few years without having to save all the time".

While half of participants said they have a natural fear of running out of money in retirement, the majority appear confident about spending their retirement money (80%).

This is despite the reality that Australians' life expectancy lengthens. The Australian Bureau of Statistics estimates that men's life expectancy has reached 81.2 years for males and 85.3 years for females.

Seventy percent of retirees from the CFS survey said they are enjoying a comfortable retirement with the amount of money they have saved.

Many Australians (66%) are forced into retirement due to their own or partner's health. Redundancy and no longer feeling welcome in the workplace are also factors that contribute to unplanned retirement.

Fewer than one third of Australians want to stop working completely when they retire. Most want to work fewer hours while others want to continue working the same hours and pursue a passion project with less pay and fewer hours.

One in ten Australians want flexibility to dip in and out of work and the same number plan to switch to a less demanding job. Only 1% plan to study or retrain.

Deloitte Australia actuarial consulting partner Andrew Boal told a recent event that most Australians tend to focus on the financial aspects of their retirement and not the "non-financial dimensions that assume even greater importance once people are in life after full-time work."

This relates to health, social connections, housing-related issues, and living with meaning and purpose.

"They give thought to that once they enter life after full-time work. But our assertion is that if people actually gave a lot of prior thought to that approaching retirement, that could lead to a much better planned stage for life after full-time work," he told the Actuaries Institute's Retirement matters event.

Citing a separate study, 81% of retirees believe health is the most important ingredient to a happy retirement. Being financially secure came in second for 58%.

"Another issue is for a lot of people their career has given rise to a sense of meaning or purpose and going cold turkey at retirement can be very disruptive. So, a key issue to think about ahead of time is what's going to give rise to a sense of meaning and purpose," he said.