September 7, 2023 | 7 min read
Summary: There’s a whole host of factors that will determine your lifestyle in retirement – super, savings, tax, investment strategy and more. There are tools and strategies that can help you enjoy your retirement if you start preparing for it now.
You’ve spent decades working, so you don’t want to spend your retirement years scrimping for cash.
There’s a whole host of factors that will determine your lifestyle in retirement—savings, super, tax, investment strategy and more.
It can be complex, but it doesn’t have to be. There are tools and strategies that can help you enjoy your retirement if you start preparing for it now.
According to the Association of Superannuation Funds of Australia’s Retirement Standard, to have a ‘comfortable’ retirement, single people will need $595,000 in retirement savings, and couples will need $690,000.1
This table reflects budgets for various households and living standards for those aged 65-84 (June quarter 2023).
|Comfortable lifestyle p.a.||Modest lifestyle p.a.|
|Total per year||$70,806.43||$50,207.02||$45,946.62||$31,867.31|
The figures in each case assume that the retiree(s) own their own home and relate to expenditure by the household. This can be greater than household income after income tax where there is a drawdown on capital over the period of retirement.
A modest retirement lifestyle would be one that’s slightly better than you’d enjoy on the Age Pension.
A comfortable retirement lifestyle allows retirees to maintain a good standard of living (including better consumer goods), private health insurance and more recreational activities.
ASFA’s figures give a good starting point, a sense of what the average retirement might look like and what it would cost.
But what’s more important, is knowing how much capital you need to support the lifestyle you want—and how you can go about accumulating that capital.
A retirement calculator can help you answer these questions because it covers a whole range of factors.
There are a number of things to take into account when determining how much you need to retire.
The age you retire can have a significant impact on how much money you have, and how much money you need in retirement. It can depend on many things such as your health, debts, investments, super balance, age you can access your super, whether you have dependants, and your retirement plans.
Keep in mind that if you're planning to retire at around age 65, it’s likely you’ll live for another 20 years or so. Men aged 65 in 2019–2021, could expect to live another 20.3 years2 (expected age of death of 85), while women could expect to live another 23 years (expected age at death of 88 years).
Having a clear idea of the type of retirement lifestyle you’re after, is a key factor in determining how much you’ll need to live on.
This may be hard to know if you’ve still got a while to go before retiring, but the sooner you start thinking about it, the sooner you can implement a plan to turn your retirement dreams into a reality.
Some of the things you might consider are:
Once you’ve decided on your retirement lifestyle, you can work through the likely cost of your expenses, where your retirement income will come from, and finally—“how much do I need to live the life I want in retirement?”
The money you use to fund your life in retirement will likely come from a range of different sources including:
After using a retirement calculator, you may get an indication that there’s a shortfall between how much you’ve estimated to have and how much you’ll need in retirement. But there are steps you can do now to address the situation.
Some of these include:
Implementing strategies, and staying vigilant about your financial situation, can help to ensure you don’t run out of money in retirement.
Here are some strategies you could implement:
Can I retire at 60 with $500k?
According to the ASFA Retirement Standard, to have a ‘comfortable’ retirement, single people will need $595,000 in retirement savings, and couples will need $690,000, if they retire at age 67, assuming they receive part Age Pensions.
How much does the average Australian retire with?
There is no average retirement income for Australians. It varies depending on each person’s individual circumstances including the type of lifestyle they want to have, everyday expenses and health care costs.
How much do you need to withdraw from your pension?
You need to withdraw a minimum of 4% from an account-based pension each year if you are under age 65. This minimum withdrawal increases as you age.
Bottom line: while benchmarks set by ASFA provide a guide for a comfortable retirement, using retirement calculators can give you a more in-depth view of how much you can save for retirement and what that turns into as a regular income. Seeking professional advice is always recommended.
1 ASFA Retirement Standard: March quarter 2023 https://www.superannuation.asn.au/resources/retirement-standard
2 Australian Institute of Health and Welfare: https://www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/life-expectancy
* Based on KPMG Super Insights 2023 Report as at May 2023 KPMG Super Insights 2023 Report
As one of the largest pension providers in Australia,* we know that growing and keeping your money safe is important. When it comes to support, we go the extra mile—providing general pension advice at no additional cost
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This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the Insignia Financial group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at November 2023 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. It is recommended that you consider the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you make any decisions about your superannuation. You can obtain the latest copy of the PDS (or other disclosure documents) and TMD by calling us on 132 652 or by searching for the applicable product at mlc.com.au. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.