We use cookies to improve your experience on our website.  By continuing you acknowledge cookies are being used. View the privacy policy. 

How much money do you need to retire

Title
How much money do you need to retire

There’s a whole host of factors that will determine your lifestyle in retirement – super, savings, tax, investment strategy and more. There are tools and strategies that can help you enjoy your retirement if you start preparing for it now.

Key takeaways:
  • According to the Association of Superannuation Funds of Australia (ASFA), to have a ‘comfortable’ retirement, single people will need $595,000 in retirement savings, and couples will need $690,000, assuming they receive part Age Pensions.1
  • Retirement calculators can tell you how much capital you need to support the lifestyle you want
  • A financial adviser can guide you in implementing strategies to save more and avoid running out of money.
Smiling woman in living room

One of the most common questions we are asked is “How much do I need to retire comfortably in Australia?”

The answer depends to a large extent on how you’d like your retirement to look and how much (or little) you want to do during your retirement years.

We often hear specific figures bandied about, with some observers saying you need a million dollars, but that is not necessarily the case.

The reality is that most Australians have much more modest super balances, with the Australian Tax Office reporting that the median super balance for Australian men aged 60-64 is $211,996 and $158,806 for Australian women in the same age bracket.

What is clear is that after spending decades working, you don’t want to spend your retirement years scrimping for cash.

There’s a whole host of factors that will determine your lifestyle in retirement — savings, super, tax, investment strategy and more.

It can be complex, but it doesn’t have to be. There are tools and strategies that can help you enjoy your retirement if you start preparing for it now.

What you will need for a comfortable or a modest retirement

According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, single people will need $595,000 in retirement savings, and couples will need $690,000.1

This table reflects budgets for various households and living standards for those aged 65-84 (December quarter 2023).

 Comfortable lifestyle p.aModest lifestyle p.a.
 CoupleSingleCoupleSingle
Total per year

$72,148.19$51,278.30

$46,994.28

$32,665.66

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.

A modest retirement lifestyle would be one that’s slightly better than you’d enjoy on the Age Pension.

A comfortable retirement lifestyle allows retirees to maintain a good standard of living (including better consumer goods), private health insurance and more recreational activities.

Supporting your retirement lifestyle

ASFA’s figures give a good starting point, a sense of what the average retirement might look like and what it would cost.

But what’s more important, is knowing how much capital you need to support the lifestyle you want—and how you can go about accumulating that capital.

retirement calculator can help you answer these questions because it covers a whole range of factors.

  • Your current and potential super savings. It takes into account how much you’ve currently saved and your future saving based on income and your ability to save extra money into super.
  • Your investment choices. Increasing the return on your super savings can make a big difference to the amount of capital you retire with and your retirement lifestyle when you get there.
  • Your family situation. A retirement calculator allows you to include your spouse’s income, contributions and final super balance into the calculation.
  • Social Security and part-time work are two crucial ways in which many people at least partially fund their retirement. The calculator helps estimate the effect any Age Pension you are eligible for (and any work you do) has on your retirement income.

Other factors to consider

There are a number of things to take into account when determining how much you need to retire.

Your age and lifespan

The age you retire can have a significant impact on how much money you have, and how much money you need in retirement. It can depend on many things such as your health, debts, investments, super balance, age you can access your super, whether you have dependants, and your retirement plans.

Keep in mind that if you're planning to retire at around age 65, it’s likely you’ll live for another 20 years or so. Men aged 65 in 2019–2021, could expect to live another 20.3 years2 (expected age of death of 85), while women could expect to live another 23 years (expected age at death of 88 years).

Your retirement goals

Having a clear idea of the type of retirement lifestyle you’re after, is a key factor in determining how much you’ll need to live on.

This may be hard to know if you’ve still got a while to go before retiring, but the sooner you start thinking about it, the sooner you can implement a plan to turn your retirement dreams into a reality.

Some of the things you might consider are:

  • How often you would like to travel and the types of holidays
  • Whether a sea change or tree change is part of your plan
  • Downsizing – or upsizing. What are your accommodation plans in the future?
  • The types and frequency of any recreational activities
  • Do you intend on providing financial assistance to your family?
  • What options would you like to have in relation to help and support either at home, or perhaps in a retirement village or aged care facility?

Once you’ve decided on your retirement lifestyle, you can work through the likely cost of your expenses, where your retirement income will come from, and finally—“how much do I need to live the life I want in retirement?”

Your sources of retirement income

The money you use to fund your life in retirement will likely come from a range of different sources including:

  • Super: knowing how much super you have—and are likely to have in the future—is a crucial part of planning for retirement, as it generally forms a substantial part of your retirement savings
  • Age Pension: depending on your circumstances, income and assets, you could be eligible for a full or part Age Pension, or alternatively, may not be eligible for government assistance at all
  • Investments, savings and inheritance: you may be planning to downsize your house, sell shares or an investment property, or use money you’ve saved in a savings account or term deposit to contribute to your retirement. Or perhaps an inheritance or the proceeds from your family’s estate may help you out in your later years.

Ways to increase your retirement savings

After using a retirement calculator, you may get an indication that there’s a shortfall between how much you’ve estimated to have and how much you’ll need in retirement. But there are steps you can do now to address the situation.

Some of these include:

  • Consolidate your super into one account: bringing your super together into one fund will make it easier to manage. You may avoid paying multiple fees.
  • Make extra super contributions: adding more into your super is a great way to increase your retirement savings. If you don’t exceed the cap, it can also have tax benefits too.
  • Review your super investment options: choose investment options that align with how much risk you’re willing to take on and how much time you have until retirement—generally the more time you have, the more risk you can afford to take on. Diversifying your portfolio across many asset classes can also help to manage risk.

How to avoid running out of money in retirement

Implementing strategies, and staying vigilant about your financial situation, can help to ensure you don’t run out of money in retirement.

Here are some strategies you could implement:

  • Create a retirement budget: estimate your retirement expenses including housing, healthcare, utilities, transport, entertainment and other necessities. This will help you determine how much income you need to cover your costs.
  • Diversify your investments: maintain a diversified investment portfolio that balances risk and potential returns. A mix of shares, bonds and other assets can help manage risk while allowing for growth
  • Set up a withdrawal strategy: determine a systematic way of accessing money from your retirement account. The 4% rule, for instance, suggests drawing down 4% of your initial retirement savings, and adjusting the amount for inflation in every year after
  • Healthcare: account for potential healthcare costs or consider setting up a health savings account to cover any medical expenses
  • Seek professional help: a financial adviser can help you integrate other factors that might make a significant difference, whether that’s your investment approach or super contributions strategy. From this knowledge they can create a personalised retirement strategy that aims to give you to the retirement lifestyle you’ve dreamed of.

Frequently Asked Questions

Can I retire at 60 with $500k?

According to the ASFA Retirement Standard, to have a ‘comfortable’ retirement, single people will need $595,000 in retirement savings, and couples will need $690,000, if they retire at age 67, assuming they receive part Age Pensions.

How much does the average Australian retire with?

There is no average retirement income for Australians. It varies depending on each person’s individual circumstances including the type of lifestyle they want to have, everyday expenses and health care costs.

How much do you need to withdraw from your pension?

You need to withdraw a minimum of 4% from an account-based pension each year if you are under age 65. This minimum withdrawal increases as you age.

Bottom line: while benchmarks set by ASFA provide a guide for a comfortable retirement, using retirement calculators can give you a more in-depth view of how much you can save for retirement and what that turns into as a regular income. Seeking professional advice is always recommended.

1 ASFA Retirement Standard: December quarter 2023 www.superannuation.asn.au/resources/retirement-standard
2 Australian Institute of Health and Welfare: www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy

Articles you may find helpful

What to do if you're 55 and have no retirement plan

Title
What to do if you're 55 and have no retirement plan
Teaser Title
Effective Date
2024-09-09 12:59
Short Description
If you’re thinking, "I'm in my 50s and I have no retirement plan. What do I do now?", first of all, take a deep breath, as it’s not too late to start planning for your retirement.
Feature Image
/content/dam/anzsc/images/tiles/News/mother-daughter-looking-at-laptop.jpg
Link to content page
/content/anzsc/en/news/what-to-do-if-you-are-55-and-have-no-retirement-plan
News Label
Retirement
News Label
Retirement

How much is the Age Pension in Australia

Title
How much is the Age Pension in Australia
Teaser Title
Effective Date
2024-05-29 01:07
Short Description
We look at what the current Age Pension rates are, how much extra income you could earn without losing benefits, and how often it’s paid.
Feature Image
/content/dam/anzsc/images/tiles/News/mature-couple-looking-at-mobile-phone.jpg
Link to content page
/content/anzsc/en/news/how-much-is-the-age-pension-in-australia
News Label
Retirement
News Label
Retirement

How can you access your retirement savings

Title
How can you access your retirement savings
Teaser Title
Effective Date
2024-05-29 00:51
Short Description
As retirement approaches, it’s a good time to weigh up the pros and cons of the various options available to you to access your super.
Feature Image
/content/dam/anzsc/images/tiles/News/mature-couple-looking-at-laptop-on-couch.jpg
Link to content page
/content/anzsc/en/news/how-can-you-access-your-retirement-savings
News Label
Retirement
News Label
Retirement

Contact us

Get online

Register for online access to your ANZ Smart Choice Super account in less than two minutes.

If you’ve already registered, log in to manage your account.

Need help?

Message or call the ANZ Smart Choice Super team on 13 12 87 weekdays 8.30am to 6.30pm (AEST).

 

Find out how our Hearing and interpreting services can support you.

This information has been prepared by OnePath Custodians Pty Limited (ABN 12 008 508 496, AFSL 238346) (OPC) as Trustee of Retirement Portfolio Service (ABN 61 808 189 263). ANZ Smart Choice Super suite of products which includes ANZ Smart Choice Super and PensionANZ Smart Choice Super for employers and their employees and ANZ Smart Choice Super for QBE Management Services Pty Ltd and their employees. ANZ Smart Choice Super is part of the Retirement Portfolio Service. OPC is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (Insignia Financial Group)

This information is general in nature and does not take into account your objectives, financial situation and needs. Before acting on any of this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs. You should consider obtaining financial advice before making any decisions based on this information. It is recommended that you consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you make any decisions about your superannuation or insurance. You can obtain the latest copy of the PDS (or other disclosure documents) and TMD by calling 13 12 87 or by searching for the applicable product on our website at anz.com

Any general tax information provided is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

Opinions constitute our judgement at the time of issue and are subject to change. Neither OPC nor any member of the Insignia Financial Group, nor ANZ, accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.

The Australia and New Zealand Banking Group Limited (ABN 11 005 357 522) (ANZ) brand is a trademark of ANZ and is used by OPC under licence from ANZ. ANZ and the Insignia Financial Group are not related bodies corporate. ANZ does not stand behind or guarantee these products.

© Australia and New Zealand Banking Group Limited (ANZ) 2021 ABN 11 005 357 522. ANZ's colour blue is a trademark of ANZ.

You need Adobe Reader to view PDF files. You can download Adobe Reader free of charge.

View ANZ Privacy Statement

View OPC (Issuer) Privacy Statement