How much money do you really need to retire?

Top tips on how to prepare for retirement from financial experts.
How much money you need to retire in Australia varies, but being aware means you can plan for a comfortable retirement.Getty

A comfortable retirement means having enough funds to pay for both your essential expenses, and everything else you want to do (like travel, passion projects and spending time with family). So just how much money do you need to retire in Australia?

According to the Association of Superannuation Funds (ASFA) Retirement Standard, you need a lump sum of $595,000 as a single person or $690,000 as a couple to comfortably retire at age 67. This is based on a yearly budget of $51,278 for an individual and $72,148 for a couple. It also assumes you own your home outright.

But the most recent data from the Australian Taxation Office shows the median super balance for people aged 65-69 is $207,540. About 80 per cent of people in this age group own their home, but that still leaves 20 per cent who would need to factor in rental costs.

Simply put, the earlier you start planning for retirement, the better.

Here are the most important things to keep in mind when considering how much money you’ll actually need to retire.

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What affects how much money I need in retirement?

While the ASFA Retirement Standard is often used as a benchmark, financial experts agree that how much money you need for retirement depends on many factors.

“Some people can retire on as little as $300,000-$400,000, while others need a bare minimum of $1.5m,” says Brenton Tong, financial advisor and managing director at Financial Spectrum.

“We find that the target number for most people that want the ultimate retirement starts at around $1.7m. This will give a very healthy income stream and enough capital to draw down so you can live off around $10,000 per month and still have the ability to upgrade a car, travel and help kids if there’s a need.”

Another way to estimate it is to decide how much retirement income you want each year. Then, divide that number by the number of years you want to live on that income (keeping in mind you may be eligible for the pension after that). For example, if you want $70,000 in income each year and plan to live on it for 10 years of your retirement, you would need $700,000 in total.

Can you retire with less money?

Many people retire with much less than the ASFA Retirement Standard. Data from the Australian Bureau of Statistics (ABS) shows most retirees (43.3 per cent) rely on the pension as their main source of income, followed by superannuation or annuities (25.8 per cent).

So it is possible to retire with much less, although how comfortable you are depends on your lifestyle.

Rising rents and the gradual decline in home ownership also means you’ll need more money if you’re renting in retirement. In fact, The Grattan Institute has reported that nearly half of all retirees who rent are living in poverty.

This is partly due to rent costs growing faster than increases to the pension payment and rent assistance. In the financial year to 30 June 2024, the maximum fortnightly age pension payment was $1,116.30 for an individual and $1,682.80 combined for a couple. The maximum rent assistance per fortnight was $188.20.

Bottom line? There’s a big difference between retiring and ‘retiring comfortably’.

Happy senior man and woman old retired couple walking and holding hands on a beach at sunset.

What do I need to know about superannuation?

Most of us know the basics when it comes to super: part of our wage is placed into an investment fund, which we can access once we reach the age of 60, or when we retire (if it’s later). But what do the experts say?

Depending on when you choose to retire, your retirement is likely to [be your] last decades,” explains Christine Lusher, financial planner and advisor at Lush Wealth.

“This means that how your money in super is invested will also directly impact how much you need to have saved up before retirement.”

While most of us get a superannuation account when we start working, not everyone realises we can also make choices about how the funds are invested. As a general guide, superannuation is typically invested across a range of shares.

Some are more aggressive than others, which means the potential for higher returns and a greater level of risk. You can choose to have some or all of your superannuation as cash, although the returns are typically lower than other investment options.

How much super should I have at different ages?

This really depends on the amount of super you want at retirement. But as a starting point, here is the median amount Australians have at different ages based on ATO data:

  • 25-29 years: $17,381
  • 35-39 years: $65,417
  • 45-49 years: $116,886
  • 55-59 years: $158,462
  • 65-69 years: $207,540

If you want to know how much you need at different ages to retire comfortably, Brenton Tong also shared some estimates with The Australian Women’s Weekly.

How much super should I have saved by my 30s?


How much super should I have saved by my 40s?


How much super should I have saved by my 50s?


How much super should I have saved by my 60s?


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Are voluntary superannuation contributions worth it?

While your employer automatically puts super aside for you throughout your working life, there is the option to make additional – voluntary – contributions to your superannuation fund. But is this worth it?

If you can afford it, yes. It will be better in the long run and it can help reduce your tax and increase your tax rebate.

“Most people will not save as well in their 20s and 30s and only start on extra contributions in their 40s and 50s, but you don’t get the full impact of compounding,” Brenton explains.

“For someone in their 20s, just an additional 3 per cent into your super may be sufficient over the next 40 years to get you close to your retirement goals. That’s not much in the grand scheme of things. “

Is superannuation safe in a recession?

In an economic recession, there is usually a downturn in shares and the housing market. These are both assets that superannuation funds typically invest a lot of money in, so changes in investment performance can lead to dips in your balance.

“Every investment has a bad day, so it’s best to ride through it if you can,” Brenton says. “If you’re well off retirement age, don’t worry too much about the ups and downs of your super fund. Don’t panic when it goes down. 

“If you’re getting closer to retirement age, you don’t have to invest all your money into something conservative. However, it’s important to ensure that you have sufficient safe, liquid money in your super to take care of your income when you draw on it, and any reasonably expected expenditure. That way, you’re still invested – and if your super fund falls, you won’t have to sell anything when the market is low.”

A woman holding paper various expense bills and plans for personal finances at her home.

What other factors affect money in retirement?

The numbers depend on various factors, including inflation, homeownership, location, cashflow, health and family circumstance, and relationship status.

How does inflation affect retirement?

Inflation measures how prices rise over time. As the cost of living increases, your retirement plan needs to account for these future costs. 

“Inflation is a hot topic right now; however, it’s not as bad for retirement as it would seem,” Brenton says.

“Wages tend to follow inflation so it just sets the bar higher.  It’s important to think of retirement in percentages and multiples rather than actuals as inflation makes all the numbers different.”

Christine suggests investing any “spare” change to keep up with inflation and avoid “losing” money.

How does property affect retirement?

“One of the most effective strategies to give you peace of mind in retirement and maximise your cash flow, is to own your home by the time you retire,” Christine says.

This is backed up by the data about the quality of living for people renting in retirement, despite the cost of mortgages increasing in recent years.

“If you manage to pay your mortgage off before [you retire], you will be in an even stronger position as you can redirect some extra cash towards your retirement savings,” Christine adds.

“Another benefit to owning your home is that you can use it as security if you wish to borrow money to invest and boost your saving efforts.”

Investment properties can also boost how much money you have (or need) in retirement.

“If you prefer to rent rather than own your home, you can still achieve security in retirement by investing in property and other asset classes outside of super. This way, when you are ready to settle down, you have the resources at hand to help you purchase something suitable, or to use as an income stream to cover the rent payments,” Christine says.

“Just make sure that you do your research and are well informed of the risks of any investments you make.”

How does location affect retirement?

How much you need to retire in Australia can change a lot depending on where you settle down.

“There is a big difference between wanting to retire in Sydney, wanting a quiet country lifestyle or wanting to move overseas,” Christine explains.

“Before you tackle the question of how much you need to retire, give some serious thought to where you are likely to want to live when you reach retirement age.”

Loving senior couple dancing in balcony. Happy man and woman are spending leisure time together. They are at home.
How does cashflow affect retirement?

Everyone has different cashflow requirements in their later years, so it’s important to work out a budget for retirement.

“An easy starting point is to start with your current living expenses and to adjust them accordingly,” Christine suggests.

“Consider what expenses can be removed from your current budget – for example children’s school fees, rent or mortgage repayments (if you plan on owning your home outright when you retire). Consider also what expenses need to be factored in – for example medical bills and home maintenance.” 

How do health and family circumstances affect retirement?

Things like life expectancy and inheritance affect how much money you will need to have when you stop working.

Planning for retirement is a good time to talk to your doctor about your health and consider your heritage,” Christine says. “How long did your parents, grandparents, aunts and uncles live? Are there any medical conditions that run in the family?

“Although unpleasant to think about, there is no escaping the fact that as we get older our health requires more ongoing attention, so the best thing you can do for your physical and mental health is to plan for these expenses as best as you can.”

Making sure you aren’t paying too much for private health insurance is a good place to start to try and save, and comparison companies like iSelect can try and help Australians find a suitable level of cover at a price they can afford. Paying less for health insurance means more spare cash to boost your retirement savings. 

How does relationship status affect retirement?

It’s one source of income vs two sources of income.

“If you’re in a relationship with a working partner, then you don’t need to save as much individually as you have shared expenses,” Brenton explains.

“Dual income families have the highest chance of achieving retirement goals as it’s possible to live off one income and save the other. However, for each additional child you have, expenses mount through things like maternity leave and day care, to higher running costs as your children eat through your nest egg!”

If you are single, Christine emphasises the importance of “taking ownership of your retirement numbers.”

“Not having a partner to bounce ideas off and provide a second income can be tough,” the financial advisor says, adding that women are often especially disadvantaged due to lower wages, time out of the workforce for child rearing, and caring for older relatives.

A university student works on assignment in her dorm room.She is smiling and in the background there is a big blackboard

How can younger people prepare for retirement?

You can never start too early when it comes to retirement planning. While it may not seem exciting to think about retirement when it’s in the distant future, preparing ahead can save you a lot of stress as you get older. Here are some ways you can do that:

  • Invest young.
  • Save money and create a budget.
  • Avoid consumer debt where possible (credit cards, and car or student loans) because of high interest rates.
  • Utilise your employee benefits.
  • Compare health insurance*.
  • Ensure you are paid competitively for your work.
  • Seek professional financial advice before major life events.
Senior couple embracing in kitchen of suburban home.

What is the biggest mistake people make when planning for retirement?

Leaving it too late.

“The number one best decision to make retiring easier is to start early,” Brenton stresses. “The impacts of compounding will have a massive effect.”

Christine also suggests to get financial advice “sooner rather than later,” adding that women especially often feel as though they “are not well enough informed to make confident decisions.”

“They seek more information from books, podcasts, online courses, unqualified money coaches, friends and social media. But nothing real happens for years, which means a worse outcome and fewer choices in retirement.

“Often women simply pay off their mortgage and leave their superannuation in the default option chosen by an employer. This blind faith in the system and inaction leaves women worse off.”

And according to Brenton, the marketing efforts of super companies have made retiring look “more complicated than it really is.”

“Always seek the advice of an independent financial adviser that doesn’t take a percentage of your super or have any ties with the super industry to get a genuine overview of what you need.”

Overall, how much money you need to retire depends on your individual circumstances. To be prepared, it pays to know how personal, social and economical factors will play into your life after work. Don’t wait until your 60s, start planning early!

This article takes general advice from financial advisors Christine Lusher from Lush Wealth and Brenton Tong from Financial Spectrum. Make sure you seek financial advice appropriate to your individual circumstances before making decisions.

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