How Much Money Should You Retire With in Australia?


The question of how much money you should retire with deals with so much nuance – caused by differing lifestyles, economic factors, views on money, and so many other variables.

No two people will ask this question and get the same answer. Instead, it’s imperative that you find the figure that’s right for you personally, and your lifestyle.

To answer the question of how much money you should retire with in Australia, begin by asking the ones below.

How much are your current living costs?

Look over your current budget. Your living expenses won’t be exactly the same in retirement as they are now, but that’s as good a starting point as any.

In the 80’s, it was sound retirement planning to be able to replace 70-80% of your pre-retirement income. Now, given the uncertainty of global economy, that number has gone up to 100%. Yet, also due to the uncertainty of the global economy, it isn’t realistic for most people to replace 100% of their pre-retirement income and still have enough to spend on daily expenses.

So what do you do? Instead of taking this replacement percentage as the Holy Grail of how much you ought to be putting away, think of it as merely a gauge to see whether you’re on track to supporting yourself after retiring. In any case, you’ll shortly see below that so many other factors are at play when it comes to calculating how much money you should retire with.

What kind of lifestyle do you intend to lead?

Now that you’ve figured out how much your current costs of living are, your next step is to examine whether you’re making any changes to those costs once you retire.

Are you planning to downsize – sell extra cars, move to a smaller home – now that your children are out of the house and you’re anticipating lesser responsibilities? Or do you intend to treat yourself more once you retire, perhaps by going on more holidays or spending more on recreation? If it’s the latter, you’ll need to be putting more money away for retirement, which means scrimping and saving a little more while you’re still working.

Lifestyle is  very subjective and personal. What counts as a luxurious lifestyle for one person may only be thrifty living for another. To provide us with benchmarks to measure lifestyle, the Association of Superannuation Funds of Australia Retirement Standard gives us a fair idea of the budget needed by Australians to support themselves in retirement. See below to compare budgets for comfortable and modest lifestyles for both single persons and couples.


  • ASFA Retirement Standard: A basic lifestyle relies only on the Age Pension for income. While this figure is enough to support your basic needs and will give you access to discounts on living expenses, the majority of Australians do not expect to retire with this lifestyle.
  • Single’s Annual Living Costs: $22,888 (Weekly: $440)
  • Couple’s Annual Living Costs: $34,507 (Weekly: $664)


  • ASFA Retirement Standard: A modest lifestyle provides you with income that’s higher than if you’re solely relying on the Age Pension. This means a more lenient lifestyle for you, but it will only be able to support low-cost activities and expenses.
  • Single’s Annual Living Costs: $27,425 (Weekly: $527)
  • Couple’s Annual Living Costs: $ 39,442 (Weekly: $759)


  • ASFA Retirement Standard: A comfortable lifestyle is defined by the AFSA as one that enables a retiree “to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of…household goods, private health insurance, a reasonable car…electronic equipment, and domestic and occasionally international holiday travel.”
  • Single’s Annual Living Costs: $42,953 (Weekly: $826)
  • Couple’s Annual Living Costs: $60,604 (Weekly: $1,165)

Note: These ASFA values assume that you own your home and are relatively healthy.

Now that you have an inkling of how much you should be aiming to put away to support yourself during retirement, compare costs with your current expenses. What do you need to adjust today in order to be able to save up to afford the lifestyle you want tomorrow? Regardless of whether you want to upgrade your lifestyle or downsize it, make sure that you’re shooting for a lifestyle that’s within your means.

When are you planning to retire?

The information here mostly assumes that you’ll be retiring at the qualifying age for the Age Pension, which is currently at 65 ½ years old. The qualifying age is set to increase by six months every two years, so by 2023, you need to be 67 years old before you qualify for the Age Pension.

If you retire before Age Pension age, you’ll need a bigger retirement fund because you have to support a longer period of retirement. You’ll also have to factor in the years of waiting until you reach the eligible age to apply for Age Pension.

How long do you expect to live?

Thanks to technology and modern medicine, people are enjoying longer lifespans. If you retire in good health at 65, for example, there’s a good chance you’ll live about thirty more years. So that’s thirty years that you’ll need to plan for where you’re not working anymore. Your retirement plan should be enough to carry you through that period of time.

Conversely, if you’re retiring with any health issues, your retirement plan should anticipate medical expenses. Look over this in conjunction with your health insurance and life insurance plans.

Despite your original plans, have a little extra in case you live longer than expected! For example, if you only planned for a 30-year retirement starting at 65 and you live to be older than 95, you’ll be relying solely on your Age Pension at the end of the 30-year period.

What is your savings target?

Now it’s time to do the math. Based on the table by AFSA, you should have a figure in mind about how much you’ll need every year that you’re retired. Multiply this annual figure by the number of years you expect to live after retirement (and then add some, just in case!).

Next, calculate the number of years between your target retirement age and today to find out how long you have left in the workforce to save up for your retirement. Divide the total figure by the number of working years you have left, and you’ll get the amount of money you’ll need to put away every year in order to fund your retirement.

Of course, this value will be affected by other factors like the Age Pension and inflation, so make sure you get professional advice from your financial advisor to cover all bases.

What if you haven’t saved enough yet?

Thinking about your retirement fund may feel overwhelming, especially if you’re currently far from your target figure. Yet the worst thing you can do is to put off saving because you feel daunted.

Every day, every paycheck counts while you’re still in the workforce, so start planning today. Studies show that you can double the money you’re retiring with in your last ten working years if you stow it away in the bank and let it build up interest. You can also get creative and find more ways to generate income during this last stretch, or evaluate areas you can downsize temporarily. Put in little sacrifice and a whole lot of planning now in order to have a comfortable retirement later.

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