It’s the biggest and most contentious question of the retirement debate.  How much do you really need for a “comfortable retirement”?

The answer is rarely clear. But it often scary.

Super Consumers, an organisation which is designed to protect the rights of lower and middle income people,  has just released a report with consumer activists Choice, that gives new estimates of how much you will need to retire.

But the figures have immediately sparked debate.

How were the numbers calculated?

Super Consumers has made the assumption that you own your own home outright and that you will receive the age pension. They also assume that your retirement savings generate an income of 5.6% during the retirement phase, which is based on historical returns for a typical super investment option for retirees.

If you are a single household that plans to spend $28,000 based on the low expenditure household and you retire at the age of 67, then you will need $70,000 by the time you retire and 91% of your income will be made up of the government’s age pension.

Super Consumers conducted research with 45-80-year-old Australians that showed that the majority of Australians plan to retire around the age of 67, which is consistent with the age that anyone born after 1957 can receive the age pension. Fifty-seven was selected because that is typically when people start thinking about retirement.

The numbers in the table are consistent with figures from the Australian Bureau of Statistics. In the 2018-19 financial year there were 3.9 million retirees. 55% of people aged over 55 were retired, which is an increase from 53% in 2016-17. The average age of retirees was 55.4 and the average age people intended to retire was 65.5 years.

The pension was the main source of income for most retirees. If you are a single household then based on today’s figures you can receive a maximum of $967.50 per fortnight, which is $25,155 per year. To live off $28,000 in a year you will need to draw $2845 from your superannuation balance, which will give you an extra $54.71 per week to live off.

The age pension is means-tested, so the greater your assets, the lower the amount you will receive.

The model that Super Consumers used allows for investment uncertainty to produce savings targets that give you a 90% confidence rating that you can maintain your lifestyle throughout retirement. The model also assumes that you will be retired until the age of 90.

The figures may vary if you do not own your own home outright by retirement.

Super Consumers Director, Mr Xavier O’Halloran says: “A big rule of thumb is to look at what your day-to-day expenses are and there are lots of helpful tools that can help you do that, especially on the ASIC Money Smart website.

“You should be factoring in as well is if you’re planning on owning your home by the time you retire.

“That’s actually a huge cost you can discount from what your day-to-day expenditure will be. It’s about 30% of their average expenditure during people’s working lives so it could dramatically change what you might be looking to spend when it comes to retirement.”

Super Consumers did not include analysis of what someone who doesn’t own their own home by the time they retire, will require to have a comfortable standard of living.

Mr O’Halloran says: “We didn’t include that analysis deliberately because we found that most of (future retirees) would have to be aiming for unachievable targets.

He says there would be a risk of income poverty for people heading into retirement that don’t own their own homes.

“It’s not something that consumer advice can really solve because there are bigger problems around the affordability of housing for people, so that’s part of what we’re reviewing in this consultation.

“We think it might be more useful for younger people to get an idea of how big the problem will actually be if you aren’t on the road to owning your own home by the time they retire and then they can plan ahead.”

He warns that consumer advice isn’t useful for anyone heading into retirement who doesn’t own their own home because they aren’t in a position to change their situation and that it’s a policy problem related to affordability.

The figures Super Consumers has given are based on today’s dollars and do not allow for inflation.

When asked what each spending level – low, average and high includes, Mr O’Hallaran says that they are looking at including that information in further research that they do. He says that it would give Australians a clear picture of what they can expect to spend their money on in retirement and help them make a more informed decision about the standard of living they want.

The Superannuation Funds Association of Australia (ASFA) has a table on their website that provides a detailed breakdown of what retirees can expect to spend their money on. The table is broken into two categories – comfortable and modest. It is updated quarterly and was current as of December 2021.

ASFA says that these figures are estimates only to give future retirees a rough idea of what they can expect to spend in retirement but it may vary between individuals.

What if you don’t own your own home?


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If you do not own your own home in retirement and are renting in Sydney the figures are much higher.

I ran the figures on what I will need in retirement and it’s actually quite scary for someone who doesn’t own their own home and lives in Redfern.

According to MLC’s retirement calculator – I will need $1,225,950 to have a comfortable retirement. That would give me an annual income of $68,108.33, and a weekly income of $1,309.77.

The shortfall between the age pension and my income required increases to $826.02 each week. Yes, that’s correct. The shortfall between the government pension and what I need to have a comfortable retirement is $826.02 per week.

That is based on today’s dollars so does not allow for inflation over the next few decades so it is likely to be much higher.

The main takeaways are that homeownership could be the difference between a comfortable retirement and one where you live in poverty. It is also extremely important to start saving for your retirement as soon as you can so that you can build up your balance, especially if you do not, or are unlikely to own your own home in retirement.

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