How much you need

How much does a comfortable retirement cost? And why is it so darn hard to get a straight answer?

If you’re an arty type, you might agree that retirement is subjective, creative and personal – that there can’t possibly be one, single number for everyone.

On the flipside, you might think the amount of super you need to save for retirement should be cut and dried. If you factor in the years you’ll spend in retirement, your net worth and the cost of living, the answer should be black and white. It’s maths! There’s only one answer! Right?

The truth actually lies somewhere in between. Yes, it pays to work out the basics but you also need to look at your own particular situation.

The basics

Basic #1 – your life expectancy

The average life expectancy in Australia is 80.5 years for men and 84.6 years for women. So, if you’re a bloke and you retire at 65, your retirement savings will likely have to last 15.5 years. Unless you turn out to be longer in the tooth than average and, say, kick on until after the telegram (does Her Majesty even do that, anymore?)… In any case, consider factors like your health, habits, diet and family history and take a punt at your life expectancy (there are calculators online). Build some fat in, in case you surprise yourself.

Basic #2 – your net worth

Basically, this is what you own less what you owe (if the number you come up with is negative, it might be a good idea to chat with one of our financial experts about turning this around). As you get older, you’ll likely pay down debt and grow your assets via the magic of compound interest. The greater your net worth, the more likely you are to be able to afford a comfortable retirement.

Basic #3 – the cost of living

A spending plan is probably your biggest clue as to how much it costs to maintain your lifestyle. Another guide might be the ASFA retirement standard. This provides a good guesstimate of what a modest versus a comfortable retirement might cost.

The figures are updated quarterly on the ASFA website.

Need a shortcut? The old rule of thumb says you may need around two thirds of your current income for each year of retirement.

Your special situation

What’s your idea of a comfortable retirement?

We asked around and here’s just a posy of ideas people had:

  • A life by the beach brimming with meditation, organic vegan food, spiritual reading, yoga, and exercise.
  • I might cut down my hours but I love my job. I’ll never retire. (My wife’s pretty glad about that!)
  • Travel – anywhere and everywhere.
  • I can’t wait to mind my grandbabies!
  • Woodwork is my obsession.
  • I’m going to make furniture all day, every day, starting with an eight-seater dining setting for my house.
  • Keeping our huge, lovely but feral garden under control! I’ve worked in banking my whole life but I’ve always wanted to care for disabled kids.
  • I’ve started an online course already. Hubby and I are kicking off my retirement with a trip to Guatemala, next year. Why not?!

As you can see, retirement is a very personal creation. Your individual retirement dreams will likely affect the amount of savings you need to fund them.

You need to think about where you plan to live, how you’ll spend your time and who you’ll spend it with. Once you have a picture of your ideal retirement lifestyle, you can start planning the steps between where you are right now and financial independence.

Plus, don’t forget to factor in the unexpected and have a ‘plan B’.

So how much do you need?

How much you need for a comfortable retirement will depend on a bunch of things from your retirement age to your habits. It’s a good idea to work out the basic facts and then tweak them to fit your situation.

One of our financial experts can help you further fine tune your plans by maximising your Centrelink entitlements, checking your risk tolerance, making sure you have enough of the right insurance and even helping you tee up your estate plan.

Fast figures

As a fast guide to how much retirement income you may need, apply the rule of 15. This rule says that if you want to retire at 60, you multiply the annual income you plan to live on by 15.

For example, if you plan to retire at 60 and you decide you need a retirement income of $53,000 each year, multiply that amount by 15 to figure out how much money you will need to retire. That is: $53,000 x 15 = $795,000

Of course, not everyone wants to retire at 60. If you want to retire at 55, use a factor of 17 and if you want to retire at 65, multiply by 13. You should note that using this formula means that by the end of your retirement, you will be using some of your capital to live on.

Next steps

Find out if you’re on track for a comfortable retirement with our Retirement $ projector.

Need advice? Our financial planners are here to help you. For an appointment, email us at or call us on 1800 005 166.

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