The most important thing that determines how much money you’ll need in retirement! While there always seems to be discussion on ideal retirement amounts and formulas in the media, it really just comes down to what sort of things you’ll need, or want, to spend your money on.

What does your retirement budget look like?

You’ve probably given some thought (or a lot!) to what you’d like to do in retirement – travel, hobbies, family, house renovations and so on. So how can you translate this into an indication of a retirement budget?

There are a few methods that might help you start thinking about what level of retirement income is right for you:

  • Two-thirds of salary principle: Aiming to have enough super to provide you with an annual retirement income equal to about 60-70% of your current gross pre-retirement salary is often considered to be about what you’d need to continue a similar standard of living.
  • Set your own budget: If you’ve got a pretty good idea of what your expenses are likely to be when you retire, that will give you an indication of what sort of annual income you’ll want to receive.
  • Take a tip from the experts: If you don’t really know what your expenses will be like in retirement, the Association of Superannuation Funds of Australia (ASFA) researches budgets for singles and couples to base their retirement living costs on. The ASFA Retirement Standard includes a budget for a ‘comfortable’ retirement, which allows for private health insurance, a reasonable car, a regular domestic holiday and the occasional overseas trip, in addition to general living expenses. The ‘modest’ retirement is defined as having more than the Age Pension but still only being able to afford fairly basic activities.

How long does a retirement budget need to last?

A piece of advice from one our members sums this up perfectly: “You’re potentially another lifetime in retirement!”

According to data from the Australian Bureau of Statistics, males and females currently aged between 45 and 65 can generally expect to live to around their early to mid-80s. So, If you’re thinking of retiring around 60 or 65, that’s potentially around 20 to 25 years – or even more – that you’ll need to fund.

Finding the balance between your retirement goals and your super savings

Once you know what sort of retirement income you’re likely to need, the next step is seeing how close to that figure you’ll get based on your current super position.

Here are a few calculators and tools that can help:

  • ASFA Retirement Standard – find out how much you need to support the lifestyle you want in retirement (Source: ASFA)
  • Retirement Planner – work out how you can boost your retirement income by taking action now (Source: ASIC MoneySmart)

If everything is looking on track – that’s great news.

If things aren’t looking quite as good as you’d like them to be, it might not be bad news. There are nearly always some options to help bridge any gaps between your super savings and your ideal retirement income!

There are generally three factors that you can influence to help change your potential outcomes:

  1. The age you decide to retire
  2. The annual income you draw from your super in retirement
  3. Any additional contributions

Changing one or more of these factors will generally have a flow-on effect to the others, so even if you’re not in a position to change one aspect, you may have the potential to adjust the others to still arrive at the same desired outcome.

For example, if you can’t top up your super with extra contributions but still want a retirement income that your current super savings don’t allow, you may have to retire a bit later than originally intended, allowing some extra time to continuing growing your super.

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To keep the same (if any) contribution rate to your super...

You may be able to continue working for longer and/or adjust your expectations for the annual income that may be available to you in retirement.


To keep the same retirement age...

You may be able to adjust your expectations for the annual income available to you in retirement and/or top up your super with extra contributions.


To keep the same desired retirement income...

You may be able to top up your super with extra contributions and/or remain working for longer in order to accumulate more super to meet your income goal.

Top tips in the lead-up to retirement

Find out some of our suggestions as your head towards retirement. Read more... 

Other useful resources

    Make your super last

    Australians enjoy one of the highest life expectancies in the world. Here's how to make sure your super lasts. (Source: Colonial First State)

    Retirement planner

    Try this handy calculator to see how you can help maximise your retirement savings. (Source: ASIC MoneySmart)

    Is your super on target?

    It's never too late to build up your super for your retirement. This article provides some handy tips and tools to help you maximise your super savings. (Source: ASIC MoneySmart)