How Much Do I Need to Retire? A Practical Guide for Australians
It’s one of the most common questions I get asked — and the honest answer is: it depends on the kind of life you want to live. But there are some solid starting points that can help you set a realistic target.
The 70% Rule of Thumb
If you’re looking for a starting point, here’s one that works for most Australians: aim for around 70% of your pre-retirement household income.
Many Australians sit in roughly the 30% tax bracket. If you’re earning $100,000 a year, about a third goes to the ATO — meaning your actual lifestyle has been funded by around $70,000 net. In retirement, your tax obligations typically drop significantly, so that same $70,000 can go further. And if your mortgage is paid off by then, even better.
It’s not a perfect formula, but as a back-of-the-envelope guide, it’s a solid place to start.
What the ASFA Standards Say
If you want something more concrete, the Association of Superannuation Funds of Australia (ASFA) publishes quarterly retirement standard budgets that break down what a modest versus comfortable retirement actually costs.
| Lifestyle | Couples (per year) | Singles (per year) |
|---|---|---|
| Modest | ~$52,000 (~$1,000/week) | ~$35,000 |
| Comfortable | ~$76,500 (~$1,470/week) | ~$55,000 |
A modest lifestyle covers the essentials — food, fuel, and everyday expenses. A comfortable lifestyle adds things like higher-level private health cover and international travel every few years.
The Best Approach: Build Your Own Budget
The most accurate way to figure out your number is to map out what your retirement actually looks like. Think through: Where will you live? How often will you travel? Will you still be working part-time? What does a typical week cost?
The ASFA website has a sample budget planner you can download and work through line by line. It’s a surprisingly useful exercise — most people find they spend more in some categories than they expect, and less in others. Tally it up at the end and you’ve got a meaningful retirement income target to work towards.
How Will You Fund It?
Once you have a target income in mind, the next question is how you’ll get there. For most Australians, it’s a combination of:
Superannuation drawdowns — drawing down from your super balance in retirement, ideally structured to be tax-effective.
The Age Pension — which can cover a meaningful portion of expenses for eligible retirees, depending on your assets and income.
Part-time or casual work — many people ease into retirement gradually, which can also help preserve super and manage Age Pension eligibility.
Getting that mix right — particularly around Age Pension timing and eligibility — can make a significant difference to how long your money lasts and how much you enjoy the early years of retirement.
Summary
As a starting point: aim for around 70% of your pre-retirement household income. Then go deeper — use the ASFA budget planner to stress-test that number against what your retirement actually looks like. And if you’re not clear on how to get there, that’s exactly the kind of clarity a financial planner can help you build.
Not Sure Where You Stand?
Take the free Retirement Readiness Quiz — or book a complimentary conversation with Josh directly.