How much money do you need in retirement?

It’s not a trick question, and it’s reasonably simple to answer.

How much does it cost to live right now? Then subtract repayments on a home mortgage, school fees, family commitments, weddings, barmitzvahs or your next overseas holiday. Chances are, retirement won’t involve these things (well, maybe the overseas holiday). Suffice to say, you shouldn’t be spending as much in retirement as you do at the moment.

But to work it out properly, do a budget and you’ll know what your living expenses will be. This is essential if you’re serious about how much money you’ll need in retirement. Super Funds of Australia believe that a couple looking for a comfortable retirement need about $56,000 each year. In ten years time, with inflation of 3%, that figure will be $75,000. Now add 20% - you always need more than you think you’ll need.

For many Australians with limited savings and not a lot in superannuation, what you’ll need for retirement is a scary figure. You’re not alone though – over half of us don’t have enough Super nor enough in savings.

But there may be another avenue you haven’t considered.

Retirement villages offer a way to capitalise on your biggest asset, the family home, and, through deferred management fee structures, provide some cash for a rainy day. They also eliminate sudden and unexpected costs associated with maintaining your own home while providing a supportive and caring living environment. It’s about lifestyle, although it’s not for everyone.

Before you make any decisions, always seek independent financial and legal advice. It’s also well worth your time to speak with the residents committee at any village you’re considering moving into. They have a lot of experience in this area, and can advise on any concerns you may have while pointing out many of the benefits you may not be aware of.

Finding out know how much money you’ll need in retirement is the first step in ageing well.