How much is enough?

Many Australians will spend more than a quarter of their life in retirement and you’ve probably got a clear vision of how you want your life to be. Is it golf, grandchildren, friends or travel…. or all of the above? The question is, how much money will you need to make it a reality?

At a glance

  • Industry estimates you will need 65% of pre-retirement income in retirement.
  • ASFA Retirement Standard looks at the average budget.
  • Many will fall short of their target if relying only on SG contributions.
  • There are strategies to help bridge the gap.

While many of us know what we want our retirement to look like, few of us take the time to calculate how close we are to making it a reality.

A quick calculation

There are two ways to work out how much you need in retirement. Let’s take a look at the quick way to calculate your target.

According to calculations from the Investment and Financial Services Association (IFSA), most Australians will need approximately 65% of their pre-retirement income to maintain their current lifestyle in retirement. (If you have a large expense, such as an overseas trip planned for your retirement, you may need more.)

Based on the 65% estimate, if you’re currently earning $70,000 a year, it’s estimated that you’ll need approximately $45,500 a year to maintain your current lifestyle in retirement.

The table below provides an indication of how much money would be required to fund an income of 65% of your pre-retirement income.

The average super balance for those aged 60-64 is $79,000. This is much lower than the Lump sum required figures in this table. This means, on average, many people will face a shortfall in their super and will need to partially rely on the aged pension to fund their retirement.


1Based on an AMP Annuity quote at June 2006 for a 65 year old male, 20 year nil Residual Capital Value (RCV), nil indexation