I am a 54-year-old single mum earning $300,000 a year. I have a $700,000 mortgage, $500,000 in super and am anxious I may have an ordinary retirement experience. I have only $20,000 in savings. My home is worth around $1.6m. I do not expect to get any inheritance. Any advice would be appreciated.
It’s great that you are turning your mind to this now. You are a high-income earner and have plenty of years of working life ahead of you, so I’m sure a comfortable retirement is attainable.
If the bank won’t lend you money for a home, there are ways you can still get into the property market.Credit: Simon Letch
By age 65 your super should be around $1.7m given employer contributions and earnings. This would give you a sustainable retirement income of $85,000 per year, tax-free, as a minimum.
Ensure your superannuation isn’t invested too conservatively, as lower earnings will reduce your ultimate benefit (I’ve assumed an 8 per cent return in my calculations).
Between now and retirement, I’d suggest you focus on paying down the mortgage, at least whilst interest rates are upwards of 5 per cent. If rates got much lower, there could be an argument for putting your savings into super and then withdrawing a lump sum upon retirement to clear the debt.
To ensure your mortgage is cleared in 11 years you need to be making repayments of approximately $7,400 per month. Your net monthly income is approximately $15,700, so that leaves you $8,300 to live off.
Other levers you have to pull would be a house downsize at some point in the future, or the government’s Home Equity Access Scheme. You might also be able to stretch out your employment years by making a shift to part-time.
This would enable your super longer to grow through compounding, and also reduce the number of years that your superannuation savings need to cover your living costs.