How Much Do We Need to Retire Rich?

help you take control of your financial future. So, whether you're just starting out on your financial journey, welcome, or if you are well on your way to achieving financial independence. This is the place for education, inspiration and motivation. Even my dogs are getting a bit excited. And I am here for you every Monday mon at five am, so please make sure you are following this show. So let's set up the heat on your financial goals and light

the way to a brighter, more secure financial future. And as always, please remember that my content is general in nature and educationally based only. All right, let's get started. So today we're diving into a topic that is on everyone's mind right now. Exactly how much money do we really need to feel safe? Or even Dare I say rich in retirement. It's an age old question, and despite various so called financial experts, I am here to tell you that there is no one size fits all number.

Some of these so called financial experts like to state numbers like thirty two thousand dollars a year for singles and forty six thousand dollars a year for couples, whilst other financial experts like to state fifty two thousand dollars per rounum for single people and up to seventy three thousand dollars pround for couples. And then there are the those financial experts who simply recommend aiming for approximately seventy

percent of your take home pay. Now. I don't know about you, but there aren't many people I know right now who are actually living a comfortable life and actually surviving even on one hundred percent of their take home pay right now with the rising cost of living. So hearing these numbers ranging between thirty two thousand dollars a year and seventy percent of your take home pay really leaves alarm bells ringing in my head very very loudly. Here is the truth, the cold hard truth. There is

no absolute number. Financial needs are very personal to your circumstances and your spending habits. However, as mentioned, what worries me about these financial expert estimates is that they are dangerously low and in my opinion, don't leave much or any form of comfortable lifestyle. And if you aren't familiar with who I am and my content, I am a financial planner who is very protective of your financial situation and your financial future. To me, these numbers don't spell

out financial wellness. They spell out poverty. I would much rather you overestimate how much you need, allowing you to be far more well prepared and retire with greater freedom and peace of mind, rather than discover during retirement, in the thick of retirement, that you actually don't have enough to live the life that you want and you are left stuck panicking watching your wealth erode away at a rapid speed, where you no longer have the same energy

that you have today. You no longer feel sharp in the brain, you no longer feel like you're up to speed with the latest education and training. This potentially leads you feeling alone, vulnerable, and to a certain degree, worthless. I do not want that for you. So today's episode is not about freaking you out, making you stressed, anxious, or worried. Far from it. What today's episode is about helping you gain a clearer idea as to how much

money you need for your retirement. You see, once you have a defined goal, that is, you know how much money you need, you can then start building wealth immediately, moving closer to that goal with each step, and ensuring that every single dollar that you earn is actually redirected towards your financial goals in a far more efficient way where you can actually see and feel the shifts and breakthroughs as that goal becomes a greater reality for you.

So that is the purpose of today's episode. And as one of my favorite financial quote goes, and this is by Denise Stufferphil Thomas, money loves definition and clarity. I know for myself personally, when I have a goal, a really clearly defined goal with a correct deadline, the game plan that is formed shortly after feels so much more durable, manageable, and achievable. All right, So this is where we get started. Step one. Understand your personal circumstances and your spending needs.

How much money do you really need to live comfortably? The answer is it depends. Financial needs are highly personal and they cannot be averaged out. Unfortunately, those financial experts are giving you dangerous information and misleading you to a certain point. I don't want you to average out your life, because you are worthy and deserve so much more. The amount of money that you need for your comfortable retirement varies greatly depending on your spending levels, your value system,

and your goals and dreams. So I'm going to give you seven lifestyle questions right now to help work out how much money you need you want. So, by all means, pause this podcast this episode, Grab a piece of paper and a pen and just quickly jot down some of your answers as I go through these questions with you right now. All right. Question one, where do you want to live when you retire? Now, this may seem like an odd question, but we need to think about it.

We all know that if you live in a city, your cost of living tends to be a lot higher than say, someone living in a regional town. However, if you live in a regional town, what is the cost of living looking like there? And do you need to factor and transport so that you can get between the regional town and a city to see family and friends, or to access certain infrastructures such as hospitals, or perhaps you would like to maybe look at retiring and living overseas,

no problem. What does that cost of living look like? And what is a system look like there? These are all things you need to just think about, or at least start thinking about. Question two. Will you be renting or will you still have a mortgage when you retire or will you actually own your home outright by retirement date. Now, this is an important question because it will obviously impact

how much money you need. Obviously you've got a factor in rent that is going to mean that you need a bit more income than someone who owns their home outright. But that doesn't mean that you are scot free if you own your home outright, or even if you actually have a mortgage, because you need to factor in those maintenance costs that tend to be attached with property that

you wouldn't necessarily incur if you're renting. And this is not just basic maintenance like a fresh coat of patents and new carpet every seven years or so, but what potential modifications do you need to make your home so that you can continue on living it and it suits your needs. All these little things really do add up. You need to know this so you can work out the correct number, the true number for yourself. Question three, what does your current cost of living add up to?

And are you happy with this same lifestyle quality and retirement or do you actually want more? Now? There is no wrong or right answer here. I just want you to start thinking about these things so that you know and understand what you want and we can start working towards achieving this. And as sort of things you consider here are do you as someone who likes whining and dining in a new restaurant each week, or perhaps you're someone who knows that they need to replace cars every

five years or seven years? And what about appliances? You're going to need a new fridge, washing a machine. All these little things add up. What about shopping clothes, those sorts of things, giving money to charity? All these come into play. So think about what does your current lifestyle look like? Is that the same lifestyle that you want for retirement? Is it less? Is it more? Just think about it. Question four do you plan to travel during retirement?

If so, how much and at what cost? International or domestic. Previously, when I've sat down with clients to talk about retirement income and how much they really need, we would always go through the cost of travel. Do you want an international holiday one per year or do you want two domestic holidays per year? There's no wrong or right answer. As I said, you need to think about what does

that look like? How much will that cost? Will that involve traveling on frequent flyer points and staying in youth hostels or backpacking, or will that involve business class flights and staying in luxurious hotels? Do you want to go on a holiday once a year or twice a year? Think about the cost of this and think about what is important to you and what you would value, especially after so many years of working so hard. Question five,

how much emergency money do you need? Now? This is a question not just for people who are approaching retirement or in retirement, but absolutely everyone. And I do have an older episode that's focused purely on helping you w work out how much emergency money you need. But to remind everyone, there is no magical formula and there is no perfect, one size fits all number. How much money

you need that is emergency money? You need really does vary, and it varies depending on your financial situation, your financial responsibilities, what insurance policies you already have in place, and the excess attached to those insurance policies, what safety nets you've got,

All those sorts of things come into play. But for anyone that is approaching retirement or in retirement, generally speaking, I would recommend using my sleep Well at Night strategy, which is where you have two years worth of living expenses set aside in a separate savings account for peace of mind. Now, the reason why I recommend two years worth of living expenses is assuming that your money is invested and you're living off, for example, dividends through shares.

If the market is to have a natural correction pullback even a recession, history shows that it takes on average eighteen months for the market to recover. Now, by having two years worth of living expenses, what that essentially means is is you don't need to worry about having to

seal anything in your portfolio. You can literally leave your portfolio as is, let nature take its course and live off that hash supply for the next two years, buying time for your portfolio to recover and get back to what it was previously, so you're never forced to crystallize a loss, which is something you always want to avoid doing. And not only have we got two years, which is six months more. It's a great piece of mind to know that you've got that additional buffer, hence sleep well

at night. Name tag question six. How long do you expect your retirement to last? Now? I know this is a very morbid question, but it's an important one. So people who are retiring now might think that they will only need twenty years worth of income, but if medical technology continues, they may actually end up living well into their nineties. So instead of needing twenty years worth of income, they actually need to start thinking about having thirty years

worth of income. These are the important things to think about right now. Also, on that note, are you happy for your retirement money to be funded solely from your superannuation via say an allocated pension so that you are able to make the most of the tax savings that

are under current legislation. Again, this is an important question because this may mean you can actually have less money saved up or invested in your superannuation or allocated pension because of that tax efficiency that tax savings could save you twenty thirty forty thousand dollars a year in income tax, which means that money has greater longevity. So this is why I always bang on and say SUPER is sexy. It is so incredibly tax effective both today and well

into the long run. But of course, always get personal advice because there are art restrictions with SUPER. And then finally, question seven, do you want to leave money for your estate or loved ones that is an inheritance or are you happy to literally spend absolutely everything and leave this planet, this universe with nothing. Again, these are important questions, particularly when we look at the younger generations coming through and

the cost of property. A lot of people understand that there is no way that their loved ones, their children, and their grandchildren are going to be able to get their foot in the door of the property market without inheriting some money. So for some people this is very important. They want to be able to leave a deposit. Or perhaps it's not even about property, it's about educational costs. This for some people is very important and it may

be important to you, but it may not be. But you need to ask yourself and think about this and these lifestyle choices are just starting points to get you thinking. You also need to take into consideration things like healthcare needs, potential medical expenses. We might have an accident, you might get ill, you might need to travel overseas to get a certain type of treatment, you may need to invest

in alternative treatment, and of course where you live. All of these things can significantly impact your required retirement savings or even better, required retirement investment portfolio. All right, let's move on to step two. Grab your calculator. Once you've written down your answers, grab a calculator and start adding up what the annual cost of this lifestyle would actually look like. Don't be afraid to round things up. You

can use your current living expenses as a baseline. If you're struggling a little bit, that's okay, But just remember that these are going to be more of estimates and just a rough guide than actually exact numbers for you. And then from there you can add or subtract from

that number based on your retirement plans. So, for example, if your current lifestyle excluding mortgage repayments, costs say eighty thousand dollars per year, and you want to add, say an international holiday at SA twenty thousand dollars per anum, and your new annual expenses would then be looking at

around about one hundred thousand dollars. However, if you plan on moving to, say a regional town on the coastline quite a life where the cost of living might be cheaper, you might want to deduct say five thousand dollars a year from that number. And if assuming your mortgage is paid off, you still might want to allocate, say ten thousand dollars per annum for home maintenance. Now, already we're sitting at a required annual income of one hundred and

five thousand dollars per annum after tax. Now for emergency savings. If you like my idea of the sleep well at night strategy, you might want to allocate two hundred and ten thousand in a savings account which covers two years worth of those living expenses at one hundred and five

thousand dollars per annum. And you are aware of medical technology, and you're feeling fit and strong and healthy and take good care of yourself, you might want to assume that life expectancy is probably going to be around about mid nineties for your so you're going to need about thirty years with a retirement income. And in this example, let's say we want to lead one million dollars in today's

dollars for our children or grandchildren. Now that one million dollars in today's terms is actually going to be about two point one million dollars in thirty years time, assuming an average inflation rate of two point five percent per annum. See how we now know numbers. We've got a clearer idea as to how much money we really do need. Exploring these numbers, that is, investing time. Exploring these numbers gives you a much clearer picture of what you really

need to start planning for. And as I said, it's better to discover this sooner rather than later, which is exactly why I'm sharing this episode with you right now. All right, now we've got some ideas about numbers, let's calculate the true number. Step three. All right, now, we know in our example that we want one hundred and

five thousand dollars per ADAM after tax. Again, assuming we're using an allocated pension here, which is currently tax free under current legislation, we need two hundred and ten thousand dollars in emergency money, and we want our money to last approximately thirty years and we're happy, as I said, to live off superannuation through an allocated pension. Now from this we can start to look at actually a net

figure to work towards as a goal. So the next step is now to use a retirement draw down calculator.

I have linked my favorite one in the podcast notes for you, and please know that we will be adding one to the Sugar Mama website soon, but for now, if we assume an average starting account balance of around two point one eight million dollars, drawing an annual income of one hundred and five thousand dollars adjusted for inflation each year, so that that means that that one hundred and five thousand dollars each year will actually increase by

two point five percent, so you're never going backwards. You can keep up with the rising cost of living. And assuming an average annual net return of six point five percent per annum, these funds should actually last around thirty years. But guess what, it actually leaves just over two point one million dollars in super for your estate. So there you have it, two point one eight million dollars in super.

If you want one hundred thousand dollars a year or one hundred and five thousand dollars per annum, and to be able to leave the equivalent of today's one million dollars to your estate. Now, if we add back in that two hundred and ten thousand dollars for emergency money, this means in total you need approximately two million, four hundred thousand four retirement. That is two point four million

dollars for retirement. Interestingly, though, if you didn't actually want to lead anything for your estate, you would only need one point eight five million dollars in super plus your emergency fund. However, here's the interesting part that three one hundred and forty thousand dollars difference in retirement balance can actually make a huge difference in comfort, wealth, and security, as this three hundred and forty thousand dollars can actually serve as your two million dollar a state, or as

a greater sense of comfort and peace of mind. If the rising cost of living gets out of hand again, or something happens to you and you need to eat into your wealth, you've got a safe buffer there for yourself. Now, this really highlights the importance of knowing your true correct and even best numbers so that you can start preparing now and make the most of every single opportunity today. Wouldn't you rather know this now, that what you need

more than discover it when it's too late. As I said, we're older, we're slower, we're more tired, we're more achy. Know this now. And if you are listening to this and thinking, oh, my goodness, I need a lot more money in superannuation than I originally thought. Great, I'm glad you're listening. I'm glad you're starting to wake up and

realizing the dangers of those financial experts. So your next question is, Okay, great, Canna, I now know, but how am I possibly going to get two point four million dollars in super? All right, don't panic, don't worry. I've got your back. I'm here for you. In next week's episode, I'm going to be breaking down all the different ideas and strategies to help you make this happen to the

best of your ability. I'm going to be exploring lots of different ideas that you may have never heard about or thought about before, so that you actually understand this is possible. If you start working on your superannuation goals. So again, please make sure that you are following this show so that you know when this episode comes out next Monday morning. All right, let's move on to the final step, step four, and that is the importance of

professional financial advice. A good starting point for every single of Australian, regardless of your financial situation, sure or not, is to always seek professional financial advice, not financial experts, not financial influencers, financial planners, experienced qualified and licensed financial planners, especially regarding retirement spending and understanding how the age pension and allocated pension may help you achieving your retirement goals

and dreams. A financial planner can actually sit down with you and help you design and create a personalized financial plan that aligns with your goals, your lifestyle, your deadlines, and your risk and your longevity expectations. A financial planner is not just about helping you pick the right investments. Yes, they will help you with that and do that work for you, but most of the value from a financial planner actually comes in creating the strategy and creating a

strategy that allows you to efficiently achieve your goals. And in fact, I have to say another value of financial plan is and the one that is quite often forgotten about or not even realized is when a financial planner can actually stop you from making a disastrous mistake or a decision that's going to come with great regret or consequences. This is why you need to see a financial planner.

And I will say, the legislation does change, it does get updated, but also at the same time, different opportunities present themselves, different loopholes, that is, legal loopholes will also come up where a forward planning, proactive financial planner knows your situation, knows your goals and actually can say, hey, we need to tweak and change the strategy. This will actually help you significantly, make a big difference and save

you time and money. This is why you need to see a financial planner for your retirement planning all right. In summary, the amount of money you need to feel safe or even rich and retirement is deeply personal. It is influenced by your unique circumstances and goals. It is a central to prepare well ahead, to start thinking about what you want, what you need, and what you value.

And then, of course, always if you feel ready, seek professional financial advice to boost your confidence, make sure that you are informed, educated, and have all the information you know to make educated decisions that are going to benefit yourself your mental health as well as your financial wellness, and ensure that you're on the right track. Remember, financial empowerment starts with understanding your needs and taking proactive steps

towards achieving your goals. All right, thank you everyone for listening to today's episode on Sugar Mama's Fireplay. If you found this episode helpful, please share it with your friends and leave a review. Please don't forget to follow us on Instagram at sugar Mama tv for more tips and

inspiration on empowering your financial future. And I will see you next Monday, but we'll talk about how to build this two point four million dollars superinnuation treasure chest for your long, luxurious and fabulous retirement chaufinet