Retirees to get a new target

There is no “one size fits all” when it comes to retirement. This is especially the case when figuring out how much to save to retire comfortably. Most people are after a lifestyle that broadly matches the one they had during their working lives.

Despite this, the super industry regularly uses retirement targets that claim you’ll only be “comfortable” if you spend as much as the top 20% of income earners. These targets are misleading for people on lower and middle incomes, who would have to live more frugally during their working lives than in retirement, which is out of step with people’s desire to smooth their income across their lives.

This is as unsurprising as it is unhelpful from an industry that has a financial incentive for you to over-invest in your super.

So, what is the solution? The Retirement Income Review pointed to the need for better guidance to help people plan ahead. With this in mind, Super Consumers Australia, with the consumer group Choice, will develop new retirement savings targets based on people’s realistic expectations, to be released in late 2021. Xavier O’Halloran, director, Super Consumers Australia