From deciding when you want to call it a day to figuring out your next holiday, there’s a lot of planning that goes into retirement.

One of the biggest factors influencing the answers to both these questions is money: how much do you actually need of it to retire? After all, this number will influence both how long you have to work to earn it, and how you’ll be able to spend it.

So what’s the magic number, you ask?

Well, there’s no one set dollar figure that works for everyone – like most other aspects of super, it all depends on your own personal needs and circumstances, and the other assets you may have outside of super. But there are a few tools that can help you get an idea of what you might need.

The ASFA Retirement Standard

As a guide, the Association of Super Funds of Australia (ASFA)’s Retirement Standard estimates that a couple will need a lump sum of $640,000 in combined super savings at retirement in order to enjoy a ‘comfortable’ retirement.

A single person, meanwhile, will need a lump sum of $545,000 in super savings.

A ‘modest’ lifestyle, on the other hand, will require a lump sum of $70,000 in super savings at retirement.

Broken down for a 65 year old retiree into a yearly budget1 (the income you’ll need), this looks like:

SingleCouple
Modest lifestyle$28,165$40,560
Comfortable lifestyle$44,146$62,269

So what does a ‘comfortable’ retirement look like, compared to a ‘modest’ retirement?

It could be the difference between being able to run air conditioning in the summer vs having to watch utility costs; or the difference between domestic and occasional overseas holidays, and just being able to take one domestic holiday, or a few short breaks over the course of your retirement.

However, it’s important to note that the Retirement Standard won’t cater for everyone. For example, it assumes, for both a modest and comfortable lifestyle, that the retirees own their own home outright and are relatively healthy.

It also assumes that the retiree, or retirees, will draw down all their capital and eventually receive a part Age Pension.

ASIC’s MoneySmart has also calculated a benchmark figure for how much you might need.

MoneySmart tells us to assume you need 67%, or two-thirds, of your pre-retirement income before you retire in order to maintain the same standard of living in retirement.

However, this doesn’t cater for everyone either, with MoneySmart pointing out this estimate is only suitable for above average income earners.

1Budgets for various households and living standards for those aged around 65 (December quarter 2019, national)

Retirement income simulator

If you have an accumulation account, you can log in to have a play around with the retirement profile in your account.

This looks at different factors, such as your salary and super contributions, your desired annual income in retirement, your planned retirement age, and the options your super is invested in, to estimate how much super you will retire with and how many years this will provide you with an income.

If you have a defined benefit account, you can also try the Retirement Income Simulator on our website to look at how much you may have in retirement and how different factors may change this figure.

Making a retirement budget

Sometimes the most helpful things are the most obvious – in this case, creating a good old budget can help give you an idea of what your financial needs will be in retirement.

To help get you started, we have a handy income and expenses checklist you can fill out, while MoneySmart has also created a budget planner to help you on your way.

As you go about using these tools, remember to think about your current expenses and how they might change by the time you retire.

For example, if you have a mortgage, will you have paid this off by the time you retire? If you are currently looking after children or other family members, will these arrangements still be in place by the time you retire? If you currently have a car – or two – will you be able to make do without it, or primarily use alternative methods of transport after you stop working?

While some of your current expenses may disappear, remember to also think about the kinds of new expenses that may emerge in retirement.

Some of these may be more fun than others – for example, with all the new-found freedom you’ll have in retirement, you may be planning to travel more than you currently do. On the other hand, as you get older, your health needs may also change, which means you may need to spend more on health-related expenses.

Other info you might be interested in

How do you know when you’ll be ready to retire?

When it gets to crunch time, it can be hard to figure out the right time to say goodbye to a decades-long career and prepare yourself both financially and emotionally for the change.

How to boost your balance before retirement

If you’ve run the numbers to see what kind of super balance you’ll need to help you live out your dream retirement and realised you have some catching up to do to help you get there, it’s never too late to start.

How to plan for a fulfilling life after retirement

Given how tied our work can become to our identities over time, it’s important to think about what life might look like in retirement when that tie to work and all it entails is no longer there.

What needs to be part of your retirement planning beyond super

We spend a lot of time talking about it here at Qantas Super, but your super isn’t the only thing you need to think about when it comes to your retirement planning.

We're here to help

If you want to learn more or need help with making a decision about your super, you can chat to a Super Adviser. It’s included as a part of your membership so there’s no extra cost.

Grow your super

Putting your money into the super system is one of the most tax effective ways of investing. So it’s important to think about making additional payments to your super account – a few dollars today can mean a lot more when you’re ready to take that holiday you’ve dreamed of in retirement.