A million dollars is a figure that’s often cited as the amount you need to retire. But while $1 million doesn’t go as far as it used to – it only goes slightly above the median house price in Sydneyi – for many people it still sounds like an impossibly large amount of money to save.

In reality, there’s no set figure you need to have accumulated in savings, super, real estate or other investments before you can retire. Instead, the size of the retirement nest egg you’ll need will really be determined by your individual goals and circumstances.

Calculate how much you need to retire

A large part of working out how much money you’ll need to cover your retirement depends on the sort of lifestyle you’d like to enjoy.

The Association of Superannuation Funds of Australia (ASFA) estimates that Australians aged around 65, who own their own home and are in relatively good health, will need the following amount of money each year in retirement, depending on whether they intend to live a modest lifestyle or a comfortable oneii:

Modest lifestyle Comfortable lifestyle
Single Couple Single Couple
Total per year $27,902 $40,380 $43,687 $61,909


A modest retirement lifestyle is considered better than one solely dependent on the Age Pension but includes only basic activities. A comfortable retirement assumes you’ll be involved in a broad range of leisure and recreational activities, do some travelling, and have a good standard of living.

If you own your own home, another useful measure is that you’ll typically need around two-thirds (67%) of your pre-retirement income to maintain the same standard of living in retirementiii.

Calculate your day-to-day expenses

Your current monthly budget is a good place to start when trying to forecast your day-to-day living expenses in retirement, but don’t forget to factor in increases in the cost of living over time.

Some costs may be removed – for example, if you own your home you might be planning to have your mortgage paid off before you retire and perhaps the education costs of any children will also be out of the way by then. Work-related expenses, such as petrol or public transport costs, takeaway lunches, work clothes and dry cleaning will probably also be a thing of the past.

But you’ll still have ongoing costs such as utilities, food, healthcare and insurances to cover, along with the costs associated with owning a car, if you have one. And it’s likely that your spending on recreational activities could also increase once you have the time to enjoy them.

Your lifestyle

The type of lifestyle you’d like to enjoy in retirement could have a big impact on how much money you’ll need.

Give some thought to the things you like to do now that you may want to do more of in retirement, or any new hobbies you might like to take up, and the expenses involved in doing these.

And if you plan to travel – be it around Australia in a caravan or eventually by plane across the globe – you’ll need to plan for those costs, too.

Check your life expectancy

If you plan to retire at age 65 it’s possible that your retirement savings will need to last you at least 20 years, as life expectancies in Australia continue to increase. Currently men aged 65 can expect to live to 84.9 years, while women can expect to live to 87.6 yearsiv. There are different living options available in retirement too, so it’s important to think about the long term when considering your financial situation once you stop working.

Check eligibility for government entitlements

Depending on your circumstances, you could be eligible for a part or full age pension payment, which could boost your retirement income.

Other government benefits you may be eligible for include Carer’s AllowanceDisability Support Pensiontax offsets or government loans.

You could also be eligible for a Seniors Card and/or a Pensioner Concession Card, which can help reduce the cost of public transport, some entertainment, healthcare and medications.

And don’t forget that once you hit 60, there’s a number of other benefits you might be able to access.

Options to boost your retirement funds

If you’re concerned you won’t have enough to retire and enjoy the lifestyle you’d like, you could consider working beyond the retirement age, whether full time or part time. Though this can affect access to your superannuation and other government benefits, so it’s important to do your research.

And it’s worth remembering that even beyond retirement your money can continue to grow if you leave your super invested and only draw it down as you need it via a pension, instead of taking it as a lump sum.

If you’re unsure about how much money you’ll need to retire, we can help you determine whether your retirement savings are on track.

i Core Logic, Hedonic Home Value Index, November 2020.

ii Association of Superannuation Funds of Australia (ASFA), Retirement Standard June 2020.

iii Moneysmart, How much super you need.

iv Australian Institute of Health and Welfare, Deaths in Australia, August 2020.

©AWM Services Pty Ltd. First published November 2020

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Inspired Money