How to keep SMILE-ing in retirement

If you're crunching the numbers to work out how much you need in retirement, it's time to sit down and take a deep breath...

The latest Retirement Standard from the Association of Superannuation Funds of Australia estimates that people retiring today, who are in good health and own their own home outright, will need $430,000 if single and $510,000 for a couple to maintain a comfortable standard of living for 20 years of retirement1.

And if that doesn’t sound enough, there could be more sobering news. As we live longer we may need even more, sparking the recent media debate on whether $1 million is sufficient2

But the reality is that many Australians don’t have enough super to retire in comfort—average super balances at retirement are around $197,000 for men and only $105,000 for women3

How much is enough for you?

How much you’ll need for your own retirement is very personal and depends on what sort of lifestyle you’d like to enjoy.

But what’s certain is that every dollar counts if you want to avoid relying on the Age pension to make ends meet. So you’ll need to protect your hard-earned savings when you make the transition to retirement.

Like many of us, you probably protected yourself against the risk of falling ill or losing your job as you raised your family and built your wealth.

But retirement brings a whole new set of investment risks, so it’s important to remember SMILE:

  • Sequencing—The risk that the order and timing of your investment returns is unfavourable, resulting in less money for retirement. Hence, the timing of your retirement can make a huge difference. If you retire in a bad year on the investment markets, it could deliver a serious blow to your retirement nest egg. 
  • Market—It can be difficult to recover from negative market returns while you’re drawing an income from your savings.
  • Inflation—A 3% yearly rise in the cost of living might not sound a great deal. But it means that prices will more than double over the next 30 years.
  • Longevity—The latest Intergenerational report tells us that by 2055 Australians' life expectancy will have climbed to 95.1 years for men and 96.6 for women. This means your retirement savings may need to last for up to 30 years or more.
  • Emotional—If you’re not careful, you can easily end up buying and selling at the wrong time.

Earlier in life, these investment risks aren’t as critical, as you have more time to recover from losses. But when you approach retirement, you have less time to play catch up. And you don’t want to lose what you’ve spent the best years of your life working hard to build up.

Like to know more?

  • Have a look at Super in a nutshell to see exactly what a comfortable—and a modest—retirement means. 
  • Use AMP’s What’s my number? to see how much you’ll need to live the life you want in retirement.
  • Speak to an AMP financial adviser to help protect yourself against the risks and achieve the retirement income you want.



3 Association of Superannuation Funds of Australia, An update on the level and distribution of retirement savings, March 2014.

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© AMP Life Limited. This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.