most of us would be quite comfortable living on $100,000 per year in retirement it's enough to cover living expenses enjoy travel and spend quality time with family and friends which is what retirement's all about isn't it but how much money do you actually need to be able to retire on $100,000 a year Well in this video I'm going to answer that exact question I'm also going to share with you the most common reason people work years longer than they need to and miss out on their best retirement years hey there I'm Chris trano the founder of super guy your number one resource for retirement planning I'm also a managing partner of the retirement planning firm Toro wealth as always this video is general information only and does not constitute Financial advice so please read the disclaimer found in the description below just before delving into how much you need to retire on $100,000 per year let's consider what type of lifestyle that might provide to get a bit of perspective about the standard of living that $100,000 provides the the association of super funds of Australia publishes quarterly retirement standards figures to help retirees estimate the income that they need to achieve their desired lifestyle they conclude that for a comfortable lifestyle Australians need approximately $5,000 per year for a single person and $71,000 for a couple to cover expenses so what constitutes a comfortable retirement well a comfortable retirement is defined by them as maintaining a good standard of living uh daily Essentials such as groceries transport and home repairs as well as private health insurance a range of exercise and leisure activities uh the occasional restaurant meal plus an annual domestic trip and an international trip once every 7 years so if a comfortable retirement lifestyle is around $50,000 per year for singles and $70,000 for a couple then an income of $100,000 would allow you to enjoy all of this lifestyle with a lot of cream on top soundss like fun so let's find out how much money you'll need to retire on $100,000 a year now the amount that you'll need will depend on what age you retire uh how long you want your money to last and whether you are assessed as a single person or a member of a couple a homeowner or a non-homeowner for age pension purposes let's take a look at a range of different retirement ages and how much you need to retire at those ages to cover retirement expenses of $100,000 per year so here's a table showing how much Capital you would need if you were single or a couple and retiring at a particular age across the top x-axis and how long you would like this money to last along the side y AIS these calculations assume a net investment return after fees and taxes of 5% per anom and inflation of 2.5% peran they also assume that you're a homeowner and eligible for age pension payments so looking at at the First Column if you're single and you want to retire at 60 on an income of $100,000 per year you need 1.5 million for your money to last 20 years 2.1 million to last 30 years and 2.5 million to last 40 years if you are single and you want to retire at 65 you need pretty much the same for a couple wanting $100,000 combined you'd need 1.3 million to have your money last 20 years now 1.95 million for your money to last 30 years and 2.4 million for your money to last 40 years now it seems counterintuitive that a couple needs less than a single person but let me explain the reason why a couple needs less than a single person for the same period of time is that a couple will be eligible for higher age pension payments combined compared to one person remember we're solving for a $100,000 income total so it doesn't matter if there's one person two people or six people it's still 100,000 but more people will get more age pension so they would need less Investments make sense Additionally you might have noticed that there isn't really a difference in savings needed if you're retiring at age 60 or 65 and this is because age pension payments don't factor into the equation until a much later age due to such a large sum required to support $100,000 per year whereas there would be a very noticeable difference in values for each square if the income we were aiming for was say $60,000 per year what if you weren't eligible for age pension payments at all or you wanted to exclude age pension from your calculations how much would you need to fund $100,000 per year income this table shows you how much you need to retire on $100,000 a year if you were not eligible for age pension payments the amount is the same for both singles and couples and regardless of your retirement age due to the age pension not being included again the calculations assume a net investment return of 5% per anom and an inflation of 2.5% perom so here you can see that you need $1.6 million to have your money last 20 years 2.15 million for your money to last 30 years and 2.6 million for your money to last 40 years now as I mentioned earlier $100,000 does provide most people with more than a comfortable retirement income often more than is actually needed and this leads me to the most common reason people work years longer than they need to and miss out on their best retirement years and that reason is aiming for a retirement income then is higher than what you actually need let me explain often people will say I want $100,000 per year without any relevance to their situation are you sure you really need $100,000 I'm not saying you don't heck I could spend $100,000 no problem but there's a catch you see the difference between covering expenses of $100,000 per year throughout retirement versus $70,000 per year equates to you needing an additional $1 million more in money on the day you retire so how many years longer will you need to be working to get that extra $1 million you see what I'm saying the problem with aiming for a retirement income higher than what you actually need is that you may miss out on your best retirement years your retirement income objective should be based on your personal goals and objectives and the amount of money that is required to meet those objectives that's it this might even involve working with a financial advisor to create and optimize your personal retirement plan if you found something valuable in this video click the Thumbs Up Button stay super I'll see you on the next one
