How Much Do You Need to Retire?
How Much Do You Need to Retire?
Planning for retirement starts with understanding the lifestyle you want. Whilst everyone’s circumstances are different the ASFA Retirement Standard provides a helpful guide by estimating how much income most Australians need each year for either a modest or basic retirement.
A modest lifestyle requires $54,240 a year for a single and $76,505 for a couple – aged 65-84. This level of spending allows for social activities, limited domestic travel and access to good healthcare. In comparison, a basic lifestyle requires $35,199 a year for a single and $50,866 for a couple - aged 65-84 and focuses on meeting essential living costs without many discretionary extras.
To support these levels of spending, ASFA estimates that a person retiring at age 67 would need approximately $595,000 in superannuation for a single or $690,000 for a couple to fund a modest retirement. For a basic lifestyle, the estimated required balance is $100,000 for both singles and couples. These figures assume you own your home and are updated regularly to reflect inflation and changing living costs.
As retirement approaches, estimating your annual spending can become increasingly challenging. It’s important to account for essential living costs such as housing, groceries, transport, and healthcare, as well as discretionary expenses like domestic travel and hobbies. You should also plan for irregular but significant future outlays, including home maintenance and vehicle replacements.
Calculating how your superannuation, investments and potential Centrelink entitlements will meet your income needs throughout retirement can be complex. Financial modelling software can help project your longterm position, which a financial adviser can assist with and help interpret the results and identify any funding gaps. The outcome may confirm you are on track, or it may highlight the need to strengthen your position. Strategies such as delaying retirement or making additional super contributions can improve your retirement readiness. Identifying these issues early is important, relying solely on the Age Pension may leave you short, as the maximum payment is below what is required even for the basic lifestyle benchmark.
If you’d like help modelling your retirement needs, please don’t hesitate to contact one of our dedicated financial advisers to start planning with confidence.
This information is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether it is appropriate for your circumstances before making any decisions, and seek personalised advice from a qualified financial adviser.