How Much Do You Need to Retire in Australia

Calculating how much is adequate for retirement depends on various factors, including your lifestyle, future ambitions, and the number of years you want your money to last. Furthermore, determining how much money you’ll have available when you retire depends on your current income, expenses, super balance, and other assets. 

With so many variables, it’s easy to understand why you might need some expert help to ensure you can reach your ideal retirement needs.

Retirement savings: How much is enough?

When calculating what you will need once retired, it’s important to differentiate between a modest lifestyle and a comfortable retirement lifestyle.

According to the Association of Superannuation Funds of Australia (ASFA), a modest retirement lifestyle accounts for:

  • a retirement lifestyle that is slightly above the Age Pension level
  • cost of basic health insurance
  • infrequent leisure and social activities

Alternatively, a comfortable retirement accounts for:

  • retirees to maintain a good standard of living in their post-work years
  • daily essentials, such as groceries, transport and home repairs
  • basic private health insurance
  • a range of exercise and leisure activities
  • occasional restaurant meals
  • annual domestic trips and overseas trips every seven years

Australians aged 65 and up who own their own house and are in generally excellent health would require the following amount of money per year in retirement:

Image Source: (March Quarter 2022, National)

To continue your current standard of living, once retired, you will need to ensure your retirement strategy is tailored to your own specific needs, ensuring adequate income can be sustained for all your retirement years, or life expectancy

Another rule of thumb for estimating how much money you’ll need in retirement for Australians with above-average earnings is to anticipate you’ll need 67% (two-thirds) of your pre-retirement income to maintain the same quality of life.

To be more accurate, it’s recommended that you complete a budget, detailing all of your household and personal expenses, not forgetting to overlook any discretionary expense items you would like to account for in retirement. A detailed budget can  help you plan more accurately around your own personal retirement needs. 

What are your retirement lifestyle expectations?

Your future lifestyle is a significant factor in determining how much money you’ll need in retirement.

While the Age Pension is currently available and offers income support for those who have reached pension age, if you want to enjoy a good standard of living in retirement, you’ll need to ensure you have a decent level of super and/or investments to supplement this.

Your retirement spending will also affect how much money you need. For example, if you plan to buy a new car every few years, you’ll require more money than someone who plans to buy a car every 15 years or so.

Some other factors that will affect how much income you’ll need in retirement include:

Your Mortgage

Planning to be debt free once retired would be ideal, but if not possible, you’ll need to factor in paying out the mortgage or include your mortgage repayments in your retirement income needs. If your home loan is paid off prior to retirement you could free up more money for your retirement.

Access to the Age Pension

If you are eligible for any government benefits this can make your retirement savings last longer. 

Even if you are eligible for a part-age pension, or you can access concessions or additional benefits, this can enable you to live a more comfortable lifestyle and have a better standard of living in your golden years.

Your eligibility for the aged pension is determined by:

  • your income
  • your assets
  • your age
  • if you are a single person or a couple
  • If you are a homeowner, or not. 

Seek personal financial advice from a qualified financial advisor to maximise your eligibility for Centrelink benefits, they understand all the variables, available benefits and concessions that can improve your overall financial position. 

Healthcare expenses

Getting sick or injured can be expensive. Your state of health and medical costs is something that needs consideration as part of your retirement planning process. On the other hand, if you are in good health, you may just need to keep an emergency fund in a savings account for health-related expenses.


If overseas travel is part of your plans for an ideal retirement, you’ll require more money than if you only intend to do local travel.

How long do you plan to work

The longer you expect to work, the less you’ll need in retirement. A good plan may be to transition into full retirement. Reducing your working hours may be a good way of balancing your working and social life before full retirement, but also reducing the need to draw on retirement funds. 

Calculating Your Retirement and Annual Income Requirements

To determine an accurate estimate of how much money you’ll need in retirement, it is best to seek expert advice and speak with a financial planner. Your retirement plans need to consider so many factors including your future lifestyle, current income and assets, inflation and Government benefits, and how much money you’ll have saved for retirement, just to name a few. 

They’ll also determine how long your retirement funds need to last. This will help them calculate how much money you’ll have in super and if you’ll need to draw on other assets or the age pension. They will also work out how much money you’ll need to live on each year.

Need financial advice in Adelaide?

Prominent Financial Services would welcome the opportunity to help you. We provide financial advice and guidance to ensure our clients are financially educated to make smart financial decisions. Book a ‘Free’ Discovery Call Today!

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