March 20 2024

How much super do I need to retire?

If there’s one burning question everyone has when retirement planning, it’s probably about how much super they’ll need to retire. While there’s no magic number for this, understanding how to work out how much you might need is the first step to making your golden years truly shine.

How much super do I need to retire?

When it comes to retirement planning, it can be hard to know where to start. The Association of Superannuation Funds of Australia (ASFA) has estimated how much couples and singles aged 67 would need for a comfortable or modest retirement (as shown in the below table). While this is a good starting point, it’s important to think about your own lifestyle, life expectancy, and also factor in how you might handle anything unexpected. 

  Comfortable lifestyle Modest lifestyle
Couple $690,000 $100,000
Single $595,000 $100,000
Comfortable lifestyle $690,000
Modest lifestyle $100,000
Comfortable lifestyle $595,000
Modest lifestyle $100,000

Source: ASFA Retirement Standard.

Note: Both budgets assume that the retirees own their own home outright and are relatively healthy. All figures in today’s dollars using 2.75% AWE as a deflator and an assumed investment earning rate of 6 per cent. The lump sums required for a comfortable retirement assume that the retiree/s will draw down all their capital, and receive a part Age Pension. The fact that the same savings are required for both couples and singles for a modest requirement reflects the impact of receiving the Age Pension.

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What’s the difference between a ‘comfortable’ and ‘modest’ retirement lifestyle?

According to ASFA, a comfortable retirement means you have enough money to not only cover your basic needs like food and housing, but also enjoy extras like going out to eat, traveling, and private health insurance.

A modest retirement means you have just enough to cover the basics and maybe a little more, like limited leisure activities and basic health insurance.

In short, "comfortable" gives you room for fun and extras, while "modest" covers just the essentials.

How much money do I need per year in retirement?

To work out how much super you might need to retire, it’s good to understand what your yearly retirement expenses might be. If you’re looking for an annual amount for budgeting purposes, the ASFA suggests the following minimum amount for a comfortable or modest retirement, shown below.

  Comfortable lifestyle (per annum) Modest lifestyle (per annum)
Couple $72,663 $47,387
Single $51,630 $32,915
Comfortable lifestyle (per annum) $72,663
Modest lifestyle (per annum) $47,387
Comfortable lifestyle (per annum) $51,630
Modest lifestyle (per annum) $32,915

Source: ASFA, March 2024 quarter.

Note: The figures in each case assume that the retiree(s) own their own home, and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement.

While these benchmarks can be a helpful starting point when planning your retirement, keep in mind they’re only a guide.

To read more about the different retirement standards and expenditure breakdowns, visit the ASFA website.

How to work out how much I need to retire?

The amount you’ll really need to retire will depend on your personal circumstances, financial situation, and what you want to do during retirement. You can get an idea of how much you need to retire with a bit of number crunching and lifestyle reflection. Let’s break it down.

Your retirement lifestyle

Close your eyes and imagine your dream retirement. Do you see yourself traveling the world, pursuing long-held passions, or simply relaxing at home and getting involved in activities around your local community? The first step is to visualise your ideal retirement lifestyle. This mental picture can help you decide which of the ASFA lifestyles you might fit into and guide your retirement planning.

Your retirement expenses

Now it's time to put some numbers to your dreams. Consider the expenses you'll have during retirement. Start with your current monthly expenses and think about how they might change. Will you have a mortgage or rent to pay? What about other debts, like credit cards or car loans? Will you travel frequently or engage in costly hobbies? Don't forget to factor in healthcare costs, how you might handle any unexpected events, and rising living costs over time.

Here's an easy way to see what you might need. Subtract any loan repayments (like your mortgage or car loan) from your current take home pay. For example, if you take home $1,000 per week and repay $200 per week on your mortgage, you’ll have around $800 to spend on living expenses. 

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Why not try our Retirement Lifestyle Budget Calculator? It’s a good starting point to help work out your retirement budget. Because who needs boring spreadsheets?

Click here to try our Retirement Lifestyle Budget Calculator

Your retirement income

Comb through your finances and work out where your retirement income could come from. This money will support you during your golden years and it can come from various sources like:

  • your super fund or account-based pension
  • other investments, like dividends from shares or rental income from investment properties
  • Age Pension, or other government benefits
  • part-time work or side gigs
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Think about what your main source of income would most likely be and start your calculations from there.

Your retirement gap

Wondering whether your retirement income will cover your projected expenses? Good question! Check by subtracting your estimated retirement income from your projected expenses. The resulting number represents your ‘retirement gap’. If it's positive, great news: that could mean you're on track to cover your expenses. But if it's negative, it suggests that you might be facing a shortfall.

Seek professional advice

Working out your retirement needs can be complex, and it's okay to ask for help. Consider consulting with a financial adviser. They can analyse your specific situation, provide personalised advice, and help you create a solid retirement strategy.

While Rest members can access simple advice at no extra cost, there may be a charge for advice that covers more complex situations like retirement planning. The cost will depend on the topic and your circumstances. Our team will always discuss any costs with you before proceeding.

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Not sure when to retire? There’s a lot to think about when timing your retirement and it can certainly be tricky. Getting the right advice and understanding your personal financial needs can help guide you towards the right decision for you.

What can I do to help make sure I have enough in retirement?

If you haven’t yet retired but are looking for ways to help boost your retirement savings, here are five tips to get you started.

  1. Plan your retirement ahead of time – The earlier you start planning your retirement, the better. Mapping it out sooner means you could have more time to help set yourself up for retirement.

  2. Review your how your super is invested – Check if you’re in an investment option that’s right for you in the long-term. You should consider factors like your risk tolerance, how long you have before you retire, your retirement goals, and your values. Need a hand? Use our Investment Choice Solution Tool to help you with making the right choice.

  3. Make extra contributions – If you can afford to, you could consider making extra contributions to your super, either via salary sacrificing or after-tax contributions. Just remember that there are limits on how much you can contribute in a financial year – going over these limits could mean paying extra tax.

  4. Review your insurance cover – Check if you have any insurance cover, and if so, that you have the right level of cover that’s appropriate and affordable for you. It’s a good idea to check your level of cover regularly so that you can be sure that it’s right for you.

  5. Speak with a financial adviser – Planning for retirement can be complicated. There’s a lot you can do on your own, but it makes sense to check your plans on any of the above with a professional adviser. 
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