How much super do you need to retire?
Back
Read time: 4 mins
Retirement

How much super do you need to retire?

It’s one of the most popular searches on google, so how much super do you need for a decent retirement?

Understanding how much you need to retire is one of the most asked questions by Aussies today.

It’s important because it can impact how soon you can retire as well as the type of lifestyle you’ll have in retirement. We breakdown how much is enough based on different lifestyles, provide some case studies to help you work out if you’re on track, and list the most common things to pay for. If you need help, we have free webinars and appointments to speak to our experienced financial advisers to help set yourself up for a better future.

How much do you need in retirement?

We use the Association of Superannuation Funds of Australia (ASFA) Retirement Standard as a guide. It’s been developed to help the average Aussie work out their annual budget to fund a comfortable or modest style of living in retirement.  These numbers are based on the June 2020 quarter and assume that you own your own home outright and are in relatively good health.

A modest lifestyle

A modest retirement lifestyle will only allow basic activities but is considered better than the Government’s Age Pension on its own. Activities could include a few short breaks in Australia a year, owning a basic car, occasional leisure activities such as trips to the cinema and limited home improvements or new household items.

A comfortable lifestyle

A comfortable retirement lifestyle will allow you to enjoy a range of activities and a good standard of living. For instance, buying quality household goods, private health insurance, a nice car and enjoy both domestic and the occasional international holiday trips.

This table shows you how much money you’ll need in your super account at retirement age to help fund either a modest or comfortable lifestyle throughout your retirement.


Modest lifestylecomfortable lifestyle

singlecouplesinglecouple
Super balance you'll need at retirement age 1
$70,000 3
$70,000 3
$545,0004
$640,0004
Annual budget you'll need to stick to 2
$27,902
$40,380
$43,687
$61,909

ASFA Retirement Standard, June 2020, viewed September 2020

ASFA Retirement Standard SummaryASFA 2018, viewed September 2020

Your super balance at retirement age can be relatively low because the base rate of the Government’s Age Pension is able to meet many of the expenses required at this level.

4 This balance assumes that you’ll draw down all your capital and receive a part Age Pension.

How long do you need your money to last?

When considering how much super you’ll need for your retirement you should also think about how long you’ll need it to last. It’s different for everyone based on lots of different factors including;

  • Your age when you retire
  • Your life expectancy
  • How much super and savings you have
  • If you own your own home
  • The type of lifestyle you want to live
  • If you’re supporting others such as children, grandchildren or elderly parents
  • If you require supported living in the future (e.g. Aged Care)

Am I on track to have enough by then?

To help you visualise if you’re on track we’ve put together two case studies based on whether you’re single or part of a couple. 

Scenario 1

Mike is 45 and single 

  • Income $85,000
  • Current super balance $155,000
  • Investment option: Balanced
  • Investment return: 6.34% including CPI of 2.5%
  • Inflation: 2.5%
Projected super balance at age 67: $539,730 

This is slightly under the ASFA “comfortable” retirement standard balance of $545,000 required for a single person). Mike could speak to one of our experienced financial advisers about making extra contributions, such as salary sacrifice to grow his balance.

Scenario 2

Mike is 45 and married

  • Income $65,000
  • Current super balance $70,000
  • Investment option: Balanced
  • Investment return: 6.34% including CPI of 2.5%
  • Inflation: 2.5%
Projected super balance at age 67: $322,201 

This is half of the $640,000 ASFA “comfortable” retirement standard balance required for a couple.


Your finances in retirement

Our estimates take the following types of costs into account when estimating how much you’ll need. 

Needs (the must haves)

  • Food and groceries 
  • Healthcare expenses
  • Transport costs such as petrol, car registration and servicing and public transport
  • Utility & phone bills
  • Insurance
  • Housing costs; such as council rates

The budgets assume you have paid for your house outright and therefore have no mortgage or rent repayments. If this isn’t the case for you, you should plan for more.

Wants (nice to haves)

  • Holidays
  • Leisure activities (cinema, dining out)
  • Subscriptions and memberships
  • New household appliances

Then think about how you’ll pay for these things, noting the budgets will be different depending on whether you’re single or part of a couple

  • Super savings
  • Savings in the bank
  • Other investments e.g. rental property or shares
  • The Government’s Age Pension

Register for a free webinar

Learn key strategies for planning ahead in retirement including;

•How to grow your super faster. •How super can help you save on tax.
•How to make your super last longer in retirement.

You’ll hear from our experts who’ll use real life examples and provide instant answers to your questions.

Prefer to speak to someone one-on-one?

One of our experienced financial advisers can talk you through the retirement planning process.

Request a callback

For information about the Government’s Age Pension including eligibility rules, visit the Australian Government’s Services Australia website

 Advice about your super is part of your membership.

Your browser is out of date

Please update your browser to view this website properly

Update my browser now