Superannuation is an invaluable investment. But it can be hard to know how much to save for retirement, especially when you’re younger.

Employer contributions are a great way to start. But in order to get an idea of what your ideal retirement balance will be, think carefully and realistically about the costs of life post-work. Understanding your retirement needs will help you figure out how many extra contributions you need to make to your super fund.

So how do you figure that out? As it turns out there are plenty of ways to get a better handle on how much money you need in retirement and we’ve listed a few here:

Think about the lifestyle you want

People will have very different understandings of the ideal lifestyle. For some, it takes no more than a comfortable home and an easy routine: a modest super account and the age pension may suffice. Others might use the time to go on frequent holidays or undertake ambitious projects that get put on hold while you’re still working.

Keep in mind that just because you reach 65 and retire, doesn’t mean your spending habits will automatically change. To afford a few extra things, you’re better off making regular voluntary contributions to your super now.

What will your basic needs be?

At the most basic level, you will want to make sure your super covers your day-to-day living costs. The regularly updated ASFA Retirement Standard provides an estimate of the average living costs of retirees. As of June 2017, they predicted that a ‘modest’ lifestyle for a couple costs nearly $35,000 per year.

Depending on your situation, the age pension will cover a portion of this. You should approach this number as a rough guide. At the end of the day, you need to provide for a roof over your head, food on the table and a nest egg for emergencies.

Plan for larger expenses

Basic living costs aside, many retirees want to live their post-work lives to the fullest. According to the same ASFA standard, to fund a ‘comfortable’ lifestyle a couple would need to spend over $60,000 a year.

While these estimates do provide a more generous budget for leisure than the ‘modest’ rating, they don’t leave much wiggle room for holidays, gifts and unexpected medical bills. The simple fact is, the more super you save while earning, the more freedom you can have after you retire.

Prepare for medical costs

As you get older, medical costs usually increase. While super is a great way to fund the more enjoyable aspects of post-work life, it also exists to protect you against unexpected costs such as medical treatment. Although the ASFA projections factor in private health insurance for both the modest and comfortable bracket, you should factor excesses and extras into your budget.

Getting your superannuation ready for retirement isn’t easy and there isn’t a one-size fits all approach. You don't need to go through this journey alone.

We can help you effectively manage your superannuation account. Speak to one of our Financial Planners about your superannuation options on 1300 654 193 and develop a plan to help achieve the retirement you want.