When you’re attempting to work out how much money you will require in your post-career years, a good starting point is the Australian average cost of living in retirement.

Each quarter the Association of Superannuation Funds of Australia (ASFA) analyses the annual budget required to fund a ‘comfortable’ or ‘modest’ lifestyle during your retirement years. A modest retirement lifestyle is defined as being ‘better than the Age Pension but still only able to afford basic activities’. A comfortable retirement lifestyle enables healthy retirees to be involved in a broad range of leisure and recreational activities and to have a good standard of living.

The latest figures released, in June 2014, reveal that for a modest lifestyle a single person requires $23,363 annually and a couple requires $33,664 annually. The figures for a comfortable lifestyle rise to $42,433 for a single person and $58,128 for a couple.

This is a useful measure, but of course the cost of living will always vary depending on one’s desired lifestyle, health, interests and tastes. These numbers, for instance, assume the outright ownership of a home and the relative health of the individuals.

Of greatest concern though, is the fact that ASFA has also identified that typical retirement benefits for a full-time worker earning up to $100,000 annually (receiving only compulsory super payments, after 30 years in a taxed fund, allowing for inflation and assuming an investment earning rate of 7%), will not likely cover the costs of a comfortable lifestyle for a couple.

For a couple, such a lifestyle will require a lump sum of at least $510,000 at retirement, the ASFA Retirement Standard says. But if your tastes go beyond the average, or if your health deteriorates and you have increased medical costs, you will likely require even more, or risk lowering your level of lifestyle.

So how do you work out exactly what you will need in retirement? Begin by figuring out what your superannuation balance will add up to if you continue on your current course. Alternatively, there are numerous apps and online calculators exist for such a purpose, such as ASIC’s MoneySmart calculator.

Then put together a budget of your household’s weekly, monthly and annual expenditure. How much of this will you expect to continue into retirement? School fees and mortgage repayments will perhaps no longer come into the equation. But travel, home renovations, hobbies, courses, entertainment, eating out, or other forms of expenditure, may increase.

This is where your unique desired retirement lifestyle comes into play. What is a realistic monthly or annual amount that will make this lifestyle a reality? Compare this to the ASFA Standard to find out whether you will need more or less than the average Australian.

What good is this information? It offers you a tool with which you can check you’re on track to achieve your desired retirement lifestyle. An accurate figure allows you to decide on acceptable risk levels in your investment strategies, to raise or lower regular contributions, and to enjoy your earnings whilst knowing your future is taken care of.

The greatest power an investor has is time. But without knowing the end goal it is impossible to take advantage of time by charting a goal-specific course. Figuring out the cost of your desired retirement lifestyle is the very first step in making it a reality.

If you would like to know more, click here to speak to a financial adviser who can give you more detailed information on the best approach for your situation.