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Guidance

How much do you need to retire?

How much do you need to retire?

Figuring out how much you will need when you retire requires planning and thought.

Having an idea of what sort of lifestyle you would like in retirement is a good starting point when determining how much you need to retire.

The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard has researched some benchmark annual budgets that might give you some idea of what you could need for a ‘comfortable’ or ‘modest’ retirement lifestyle.

Comfortable retirement lifestyle

For a single person wanting a ‘comfortable’ retirement lifestyle, ASFA suggests an annual income of around $44,000, and for a couple, it gives a figure of almost $60,000.

That amount of money might cover an annual holiday in Australia, eating out regularly at restaurants, regular participation in leisure activities and owning a reasonable car.

To drive this level of income annually, ASFA estimates that a single person might need around $545,000 in assets to support such retirement expenses. ASFA suggests for a couple, around $640,000 would be the target figure.

This amount could be made up of superannuation, shares, cash, and investment property, but not the home you live in.

Modest retirement lifestyle

Living a modest lifestyle in retirement could include a couple of short breaks each year near where you live, eating out infrequently at restaurants, trips to the cinema and some paid leisure activities as well as owning an older, less reliable car.

Your expenses each year might be around $24,000 for singles and $35,000 for a couple, according to ASFA, so the assets needed to support that would be around $50,000 or $35,000 respectively, because most of your expenses would be met by the age pension.

Making your own estimate

To personalise to your own circumstances you can estimate your costs per month for the following categories ASFA outlines:

  • Housing
  • Energy
  • Food
  • Clothing
  • Household goods and services
  • Health
  • Transport
  • Leisure
  • Communications

You can then see whether you’re likely to reach this retirement income requirement by contributing to your super at your current rate by using our Retirement Calculator.

It’s important to keep in mind that your income and guaranteed super contributions may increase over this time period.

Giving your super a boost

It’s never too early or late to think about topping up your super. Putting in a little extra now can make a difference in the future.

Salary sacrificing might be an option, while bringing all your super together into one fund can help to manage fees that you might be paying.

Check the Australian Taxation Office (ATO) website for details about the latest contributions caps or talk to a financial planner to discuss strategies to help you work towards your financial goals.

Before you make a decision about your super, you should compare the costs, fees, risks and benefits of super funds. It makes sense to consider whether you can replace any insurance cover you may lose when you bring your accounts together, as well as any costs for withdrawing from other super funds and any investment or tax implications. This article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. The Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law. Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the Trustee of Commonwealth Essential Super ABN 56 601 925 435 (Fund) and the issuer of interests in Essential Super which is a product of the Fund. A Product Disclosure Statement (PDS) for Essential Super is available in branch, from commbank.com.au/super or by calling 13 4074. You should read the PDS and assess whether the information is appropriate for you before making an investment decision. Colonial First State is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (‘the Bank’). The Bank provides certain distribution and administrative services to the Trustee. The Bank and its subsidiaries do not guarantee the performance of Essential Super. Past performance is not an indication of future performance. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Pty Ltd ABN 65 003 900 169 AFSL 231139 a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank).