We’re living longer these days (someone who retires at 65 can expect to live for another 20 years), so if you’ve got big ideas for your retirement, a bit of planning may be in order. In fact, the sooner you get a handle on how your finances measure up, the better prepared you’ll be.

Let’s be honest, how long you live will be one of the most important factors in determining how much super you’ll need all up. So it’s worth having a think about that first.

We haven’t got a crystal ball, but we do have a life expectancy calculator, which is probably the next best thing.

Also have a think about the age you want to retire, and whether you’ll have access to Government benefits.

One rule of thumb that’s often used, particularly for those on above-average incomes, is the two-thirds rule. It suggests that you’ll need around two-thirds of current gross income each year.

The Association of Super Funds of Australia (ASFA) puts together a Retirement Standard1 which you can also use to approximate how much you’ll need to live off in retirement. It takes into account the usual expenses for a retiree who owns their own home.

  Single Couple
Comfortable retirement $43,665 p.a. $59,971 p.a.
Modest retirement $24,250 p.a. $34,855 p.a.

It’s not perfect – you’ll need to increase or decrease it depending on your own lifestyle - but it can be a handy starting point. Our budget planner is also a good tool to get a clearer picture of your likely spending.

At $23,095 a year for singles and a little over $34,819 for couples2, the Age Pension comes in just under the ASFA’s modest lifestyle calculation. So, if you’re eligible for the pension, make sure you factor it in when budgeting for your retirement.  

There are other Government benefits that may be available to you in retirement as well.

We’ve built a Retirement Income Calculator, a handy little tool that will help you understand how long your super could last in retirement.

You can also learn more about making your super last.

1. Source: ASFA Retirement standard for those aged around 65, March quarter 2017. 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. Single calculations are based on female figures. More information available on superannuation.asn.au

2. Source: Department of Human Services accessed on 25 May 2017. Amounts are calculated using the fortnightly maximum base rate including maximum pension supplement and clean energy supplement, multiplied by 26.