How much do you need to retire?
Our new figures take into account cost of living increases.
Need to know
- Super Consumers Australia has updated its retirement targets in light of increases to the cost of living and a higher Age Pension
- These targets give you a ‘rule of thumb’ for how much super you’ll need when you retire
As you’re no doubt aware, the cost of living has increased substantially over the past year. This means you’ll need more money in your superannuation before you retire.
But while our new super targets are higher, you may find you’re still on track to maintain your standard of living in retirement.
Retirement savings targets explained
When Super Consumers Australia talked to Australians about what they needed to plan for retirement, one of the key questions people had was: ‘How much do I need to retire?’
After extensive consultation, we developed targets to give people a ‘rule of thumb’ for how much super you need to have in order to maintain your living standards once you’ve finished working.
There are two sets of numbers:
- How much you need to have in super.
- Roughly how much income you’ll have each year when you’re retired. This income comes from both your super and the Age Pension.
Keep in mind that these targets assume you own your home (more on this later).
Another important assumption is that you spend down your super rather than trying to live off the interest, which is how super was designed to work.
We first released the targets in July 2022, but we’ve now updated these figures to reflect increases to the cost of living and Age Pension.
For most people, the amount you’ll need to retire while maintaining your living standards is about 3% to 8% higher than last year.
Accessible version
Savings retirees for pre-retirees (Age 55-59)
If you live by yourself
| Amount you wish to spend in retirement(per fortnight) | Amount you wish to spend in retirement(per year) | You need(ed) to save this much by age 65 on top of your income from the Age Pension |
| $1385 (low) | $36,000 | $91,000 |
| $1808 (medium) | $47,000 | $317,000 |
| $2269 (high) | $59,000 | $777,000 |
If you live in a couple
| Amount you wish to spend in retirement(per fortnight) | Amount you wish to spend in retirement(per year) | You need(ed) to save this much by age 65 |
| $2000 (low) | $52,000 | $116,000 |
| $2654 (average) | $69,000 | $425,000 |
| $3346 (high) | $87,000 | $1,037,000 |
Table notes:
These targets assume you will own your own home outright (or otherwise won’t pay rent or mortgage) when you retire.
Figures for couples represent the combined spending of two people living together.
Spending levels are in today’s dollars and have been adjusted for inflation. These levels are based on ABS data about retirees’ spending.
Accessible version
Savings retirees for current retirees (aged 65-69)
If you live by yourself
| Amount you wish to spend in retirement(per fortnight) | Amount you wish to spend in retirement(per year) | You need(ed) to save this much by age 65 on top of your income from the Age Pension |
| $1192 (low) | $31,000 | $76,000 |
| $1577 (medium) | $41,000 | $279,000 |
| $2115 (high) | $55,000 | $795,000 |
If you live in a couple
| Amount you wish to spend in retirement(per fortnight) | Amount you wish to spend in retirement(per year) | You need(ed) to save this much by age 65 |
| $1692 (low) | $44,000 | $95,000 |
| $2308 (average) | $60,000 | $371,000 |
| $3077 (high) | $80,000 | $1,055,000 |
Table notes:
These targets assume you will own your own home outright (or otherwise won’t pay rent or mortgage) when you retire.
Figures for couples represent the combined spending of two people living together.
Spending levels are in today’s dollars and have been adjusted for inflation. These levels are based on ABS data about retirees’ spending.
How the past 12 months have affected our targets
There’s been a lot of talk this year about increases to the cost of living, and this is reflected in our revised retirement targets too.
As stated, this year’s figures are about 3% to 8% higher than last year. But if your super is in a typical balanced fund, you would have seen your balances grow by about 9% over the last year, helping to make up this shortfall and cover the increased cost of living.
If your super is in a typical balanced fund, you would have seen your balances grow by about 9% over the last year, helping cover the increased cost of living
Some other trends have also softened the blow. The super guarantee (the amount of super your employer has to pay you) has risen by 0.5% to 11%. In addition, the Age Pension increased to account for increases in the cost of living, easing the pressure for some retirees.
The graphic below shows how the Age Pension has increased steadily over the years.
Accessible version
The age pension keeps increasing. Since 1963, the age pension has had different rates for single and partnered pensioners. During this time, the maximum base rate has kept rising. This graph shows the annual rate.
Independent figures are important
An important point about the targets we have developed here at Super Consumers Australia is that they’re independent – they’re not from a super fund or an industry group with a vested interest in getting you to contribute more to your super.
“I’ve used (retirement) calculators before, but they are from super funds themselves,” says one of the participants in our research. “You always wonder (is) this based on actual people.”
Be guided by satisfaction rather than aspiration
The 2020 Retirement Income Review (requested by the Productivity Commission) analysed data from the Household, Income and Labour Dynamics in Australia survey, and found that 88% of recent retirees reported being financially satisfied or neutral about their finances.
The fact that most retirees maintain their spending levels and are satisfied with their lifestyle suggests that using actual spending, rather than aspirational targets, is a more useful measure
Similarly, a large majority of retired Australians are happier than they were during their working life.
The fact that most retirees maintain their spending levels and are satisfied with their lifestyle suggests that using actual spending, rather than aspirational targets, is a more useful measure.
Retired renters still facing a tough time
Retired renters have higher levels of poverty and financial stress than home owners.
As we’ve previously highlighted, public support like Commonwealth rental assistance simply isn’t enough for retired renters. The Retirement Income Review (RIR) found this payment “is far below the level that would bridge the gap in their living standards compared to home owners”.
Consumer advice to contribute more to super is often not realistic for this group
Super Consumers Australia director, Xavier O’Halloran
Putting more into super generally isn’t a realistic solution for renters either, as overwhelmingly they lack the spare income to contribute more and experience higher levels of financial stress throughout their working lives.
“Consumer advice to contribute more to super is often not realistic for this group, much more needs to be done to create affordable housing if more renters are going to avoid poverty in retirement,” says Xavier O’Halloran, director of Super Consumers Australia.
Targets are just a guide for your retirement planning
It’s worth remembering we designed our targets to get people more engaged with retirement planning. These numbers are just the first step on your journey to preparing for life after work.
The next step is to get a more personalised picture of what you need to save and how to reach your goals. You can access free resources from Moneysmart, talk to the government’s Financial Information Service over the phone on 132 300, or seek independent financial advice.
