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Do you have enough money to retire?

Worried about having enough for retirement in today's high-cost environment? Our guide provides practical strategies and resources to empower you to bridge the retirement savings gap and make informed financial decisions.

Do you have enough to retire? Answering this question isn't as simple as stating how much money you should have in your superannuation. Every aspect of your financial life will impact your ability to save for and then fund your retirement. This includes your debts, your current and future living expenses, whether or not you own your own home and your investments (or lack thereof) outside of super.

There are a few ways to figure out how much money you'll need to retire, which we'll outline in this guide. Once you know how much to aim for, we'll then take you through some of the strategies to achieve it.

How much do you need to retire?

Retirement savings targets can vary depending on your income, lifestyle, and individual circumstances. Determining how much you'll need for a comfortable retirement depends on various factors.

Your retirement expenses: Consider the significant expenses you anticipate in retirement

  • Paying off your mortgage
  • Rent
  • Home renovations
  • Travel
  • Medical costs

Your desired lifestyle: To estimate the amount you need for your desired retirement lifestyle:

  • Use a budget planner if you're nearing retirement to calculate expected expenses.
  • If you own your home, a rule of thumb is to plan for approximately two-thirds (67%) of your pre-retirement income to maintain your standard of living during retirement.

Guidelines for retirement savings: Several organisations provide guidelines for retirement savings:

  • Super Consumers Australia: They offer retirement savings targets for individuals aged 55-59 and 65-69, taking into account varying spending levels.
  • The Association of Superannuation Funds of Australia (ASFA): ASFA provides an ASFA retirement standard (based on top 20% of earners), estimating retirement income needs for both modest and comfortable lifestyles.

Super Consumer Australia findings - A broader perspective

Super Consumer Australia has conducted extensive research on retirement savings targets, focusing on different income groups to provide a more comprehensive perspective.

According to their findings, the average retirement income target for various income earners is as follows:

Add the table here: https://app.datawrapper.de/table/xXLj0/publish

The Association of Superannuation Funds of Australia (ASFA) Retirement Standard

The ASFA (Association of Superannuation Funds of Australia) retirement standard provides estimates for your retirement expenses based on your desired lifestyle:

  • Comfortable retirement for a couple: ASFA suggests that a couple seeking a comfortable retirement will need approximately $71,724 per year if they own their own home.
  • Modest retirement for a couple: For a modest retirement, a couple should budget for around $46,620 annually when they own their home.
  • Comfortable retirement for a single person: A single person aiming for a comfortable retirement should plan for roughly $50,981 per year with home ownership.
  • Modest retirement for a single person: If you're a single person seeking a modest retirement and own your home, you may need about $32,417 per year.

These figures are based on retirees aged 65 with an average life expectancy of around 85 and assume home ownership.

If you'reYou'll need this much for a modest retirement You'll need this much for a comfortable retirement
Single (aged around 65)$32,417 per year ($623 per week)$50,981 per year ($980 per week)
A couple (aged around 65)$46,620 per year ($896 per week)$71,724 per year ($1379 per week)

It's important to note that this figure is based on the top 20% of earners and may not reflect the retirement needs of all income groups.

Modest versus comfortable retirement

Here's a brief overview of what the ASFA Retirement Standard considers to be a modest retirement versus a comfortable retirement.

Modest retirementComfortable retirement
Leisure activities
  • Can afford takeaway meals or cheap meals out occasionally
  • One to two short domestic holidays a year
  • Can afford to dine out at restaurants
  • Domestic and international travel
Utilities and services
  • You'll need to monitor your energy bills more closely
  • Average-speed Internet and a smaller data allowance
  • Basic private health insurance
  • Can afford to run air conditioning
  • Fast Internet and lots of data
  • Top-level private health insurance
Personal items
  • Can afford a small, budget car
  • Can't afford major home renovations, but can do minor improvements and repairs
  • Can afford a nice car
  • Can afford to do major home renovations
  • Can afford high-quality appliances, good-quality clothes and lots of household items

Important things to consider about AFSA and Super Consumer figures

It's crucial to acknowledge that retirement planning is a highly individualised process, and everyone's financial situation and lifestyle goals are unique. While the ASFA Retirement Standard (AFSA) and Super Consumer Australia findings provide valuable guidance, it's essential to remember that these figures should be used as estimates and not as strict rules.

Disclaimer: Each person's requirement for retirement is different, and the above figures should serve as a starting point for your retirement planning. Factors such as personal expenses, health considerations, and individual circumstances can significantly influence your retirement income needs. It's advisable to consult with a financial advisor or planner to create a personalised retirement plan that aligns with your specific requirements and aspirations. These figures are intended to offer general guidance and may not apply to every individual's situation.

Why is saving for retirement important?

Throughout different stages of life, retirement planning plays a crucial role in securing your financial future. Here's why saving for retirement is essential:

1. Building financial security: In your 20s, 30s, and 40s, focus on building savings and growing your superannuation for a secure future.

2. Assessing retirement readiness: Approaching your 50s and 60s, evaluate your financial situation in relation to retirement, factoring in assets, investments, and potential aged care needs.

3. Considering life expectancy: Life expectancy in Australia has risen significantly. Plan for a retirement that can sustain you over a potentially longer lifespan.

4. Continuous improvement: At any age, it's not too late to enhance your financial prospects. Consult a retirement planning professional to ensure you're on the right track.

By starting early and adapting to changing circumstances, you can work towards a financially secure retirement, even as life expectancies increase.

Finder survey: How much money would Australians like to have at retirement?

ResponseWAVICSAQLDNSW
100000028.44%28.52%16%21.11%23.1%
50000020.18%14.07%21.33%19.1%18.35%
500007.34%1.48%5.33%2.51%3.48%
1000004.59%2.96%6.67%5.53%4.11%
2500004.59%1.48%1.33%2.01%0.95%
3000004.59%3.33%6.67%2.51%2.53%
8000004.59%3.7%2.67%1.01%1.58%
15000003.67%5.93%1.33%3.02%3.48%
30000003.67%2.59%1.51%2.53%
2000002.75%3.7%1.33%3.52%1.9%
20000002.75%9.63%6.67%10.05%9.81%
100000001.83%3.33%4%3.52%4.43%
25000001.83%0.37%1.33%0.5%0.32%
7500001.83%0.37%2.67%3.02%3.48%
1500000.92%0.37%2.67%2.01%0.95%
3500000.92%0.37%1.01%0.63%
4000000.92%3.33%4%2.51%1.58%
50000000.92%2.59%2.67%1.51%4.43%
6000000.92%1.85%1.33%3.02%2.53%
700000.92%1.33%
75000000.92%0.32%
9999990.92%0.37%0.5%
7000001.11%1.33%1.51%2.85%
9000001.11%2.01%0.32%
5500000.74%
800000.74%0.5%0.32%
8500000.74%0.32%
10500000.37%
12000000.37%1.01%0.63%
16000000.37%0.5%
20000820.37%
2400000.37%0.32%
40000000.37%1.01%0.32%
4250000.37%
4500000.37%0.63%
5000090.37%
600000.37%1.33%1.51%
6700000.37%
90000000.37%0.32%
9500000.37%
9800000.37%
2005001.33%
3750001.33%
40000011.33%
650001.33%
6500001.33%0.63%
80000001.33%0.32%
12500000.5%
1800000.5%
19000000.5%
35000000.5%
60000000.5%
99999
13000000.32%
19999990.32%
21000000.32%
36000000.32%
6009000.32%
870000.32%
890000.32%
900000.32%
Source: Finder survey by Pure Profile of 1016 Australians, December 2023
Data for ACT, NT, TAS not shown due to insufficient sample size. Some other states may also be excluded for this reason.

How much should I have saved before I retire?

The amount you need saved in your superannuation for a comfortable retirement varies depending on your age and retirement goals. To help you estimate the super balance required for a comfortable retirement, we've prepared a table with age-specific guidelines.

How to calculate your retirement?

If you prefer a hands-on approach to calculate your retirement needs, here's a step-by-step guide to help you get started:

4% rule

The 4% rule is a popular guideline used for retirement planning. It suggests that you can safely withdraw 4% of your retirement savings annually, adjusted for inflation, to make your savings last throughout your retirement.

Here's a simple hypothetical example to understand this.

  • In the first year of retirement, you can withdraw up to 4% of your portfolio's value. For instance, if you have $1.5 million saved for retirement, you could spend $60,000 in the first year of retirement following this rule.
  • Starting from the second year of retirement, you adjust this initial withdrawal amount by the rate of inflation. If inflation is, for example, 2%, you would withdraw $61,200 in the second year ($60,000 x 1.02). Conversely, if prices decrease by 2%, you would withdraw less than the previous year, $58,800 in this example ($60,000 x 0.98).
  • In year three and beyond, you take the prior year's allowed withdrawal and adjust it for inflation.

It's essential to understand that the 4% rule applies only in the first year of retirement. After that, inflation dictates the amount withdrawn. The primary goal is to maintain the purchasing power of the 4% withdrawn in the first year of retirement.

How to calculate your super for retirement

Superannuation is a crucial part of retirement planning for Australians. It's designed to provide financial security during your retirement years. To calculate your superannuation needs and potential balance, you can use Finder's superannuation calculator.

This tool takes into account factors such as your current super balance, contributions, expected returns, and retirement age to help you estimate your super balance for retirement.

Using a superannuation calculator can simplify the process and provide you with valuable insights into your retirement savings goals. It's an ideal starting point for your retirement planning journey.

How can I budget for my retirement?

Budgeting for retirement is a critical step in ensuring financial security during your later years. To help you get started, here are some of the most common factors that can impact your ability to save for retirement:

  • Current financial situation. Assess your current financial status, including savings, investments, debts, and assets.
  • Income sources. Consider your income sources during retirement, such as superannuation, pensions, part-time work, and potential rental income.
  • Retirement expenses. Estimate your expected retirement expenses, covering essentials like housing, healthcare, and daily living, as well as discretionary spending for leisure and travel.
  • Debt management. Evaluate your outstanding debts and create a plan to pay them off before retirement to reduce financial burdens.
  • Lifestyle choices. Determine the lifestyle you desire during retirement, as this will influence your budgeting decisions.
  • Inflation. Factor in the impact of inflation on your retirement expenses over time.
  • Emergency fund. Establish an emergency fund to cover unexpected expenses during retirement, preventing the need to dip into your retirement savings.
  • Professional advice. Seek guidance from financial advisors or planners who specialise in retirement planning to create a customised budget that aligns with your retirement goals.

To assist you further in creating a retirement budget, you can use our budget planner. This tool helps you organise your finances and estimate your retirement savings needs more effectively.

Additionally, you can stay informed about the current cost of living by visiting our cost of living page to ensure your budget remains relevant and adaptable to changing economic conditions.

When should I retire?

The ideal retirement age varies for each individual, but there are some key considerations to keep in mind:

  1. Preservation age: Your preservation age, typically between 55 and 60, is when you can access your superannuation. This age is a common starting point for retirement planning.
  2. Transition to retirement: Consider transitioning to part-time work or using a Transition to Retirement (TTR) strategy as you approach retirement. TTR allows you to access your super while still working, providing financial flexibility.
  3. Retire at 60: Many individuals target retirement at 60 due to its accessibility and aligning with the Age Pension eligibility. The amount you need to retire at 60 depends on your desired lifestyle and expenses.

To determine how much you need to retire at 60, assess your expected retirement expenses and income sources. Consulting with a financial advisor can help you create a personalised retirement plan that aligns with your goals.

How much super should I have today?

The amount of superannuation you should have today is influenced by your age, income, and individual circumstances. To determine a more accurate estimate based on your specific situation, you can use our superannuation calculator.

This tool takes into account factors like your age, income, and contributions to provide you with an estimate of how much super you should ideally have today to be on track for a comfortable retirement.

How will inflation impact my retirement?

Inflation can significantly affect your retirement savings and purchasing power over time. Here's how:

  • As prices for goods and services rise due to inflation, your expenses in retirement will likely increase.
  • Without adjusting your retirement income for inflation, your money may not stretch as far, potentially leading to a reduced standard of living.
  • To mitigate the impact of inflation, consider investments that have the potential to outpace inflation, such as growth assets like stocks.
  • Regularly reviewing your retirement budget and financial plan can help ensure your retirement income keeps up with rising costs.

For more information on the current cost of living and ways to manage inflation's impact, you can visit our cost of living page.

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