It’s an important question

But sadly, there’s not a one-size-fits-all answer. How you want to live in retirement will directly impact how much money you’ll need.

If you want caviar and champagne every day, you’ll need a bigger super balance at retirement than someone who’s content with cold baked beans.

We’re going to look at 2 ways you can get an idea of what your lifestyle costs and what you could need at retirement to achieve that.

The first option is more personalised and takes just a few minutes of your time. Set aside about 3 to 5 minutes. The second option is not personalised at all and is published in a Retirement Standard. Using the standard doesn’t take any effort from you, but it’s not personalised so, while it’s a good guide, it might not capture the lifestyle you truly want to live.

Method 1: The rough and ready calculation

This first method uses very general assumptions and only provides a rough and approximate calculation. We recommend that you speak to a financial planner for detailed and personalised information and we warn that you should not rely on the outcomes of this method of calculation to take actions about your super or finances.

As we mentioned, this method takes about 3-5 minutes. Start the stopwatch.

This method helps you roughly work out your spending now, excluding the expenses that will have stopped by the time you retire.

Step 1: Grab these numbers and add them together to work out your total current income:
  1. Your take-home pay (what you get in your bank account after tax and any other deductions)
  2. Your partner’s take-home pay
  3. Any other income (such as from a second job, in child support, etc)
Step 2: Then get the numbers for your expenses that will stop at (or before) retirement and add them together for your expenses that will stop at retirement:
  1. Mortgage repayments (assuming you’ll have paid it off by or at retirement). If you pay rent, ignore this item and don’t include your rent here, or if you will still be paying a mortgage in retirement, don’t include it here
  2. Any savings or after-tax super contributions that you’re putting away now. If you make salary sacrifice contributions to your super, don’t include that number here (because you’ve already magically counted it in your take-home pay number)
  3. Any other costs that will stop before or at retirement. This could include kids’ school fees you’re paying now, the amount you spend on your kids for things like ballet and netball coaching, their orthodontics, clothing and so on, your professional association fees, child support you pay, the cost of your daily commute, etc.

Work out all of your numbers on an annual basis so that you’re comparing apples with apples.

Your total at step 1 (your total income) minus your total at step 2 (your total costs that will stop) will give you a rough idea of how much you’re spending each year on your lifestyle now. Knowing what you spend now will help you understand what it costs to maintain your current lifestyle.

Let’s have a look at an example:

Sarah and Matthew

Per week/month/quarter Per year Total
Sarah’s take-home pay $5,000 per fortnight $60,000 per year
Matthew’s take-home pay $3,000 per fortnight $78,000 per year
No other income $0 $0
Step 1: Total current income $138,000 per year
Mortgage $2,500 per month $30,000 per year
Savings $1,500 per month $18,000 per year
Sarah’s after-tax super conts $200 per month $2,400 per year
School fees $2,500 per quarter $10,000 per year
Other kid costs -sports and hobbies $250 per week $13,000 per year
Step 2: Total expenses that will stop $73,400 per year
Step 1-Step 2=Current lifestyle costs $64,600 per year

Total Income minus Total expenses that will stop equals Current lifestyle costs.

For Sarah and Matthew, that is $138,000 – $73,400 = $64,600

Ok, that’s the first part. Sarah and Matthew now know that their current lifestyle – excluding those things they won’t be paying for in retirement – costs something around $65,000 a year. Very helpful. But how much will Sarah and Matthew need to have in their super at retirement to live on that kind of annual income?

Using the calculator

Go to our online calculator. Click Get Started and then Skip Tutorial:

Landing page

Skip tutorial

Complete these fields with this data:

  1. Your age field: put the age you wish to retire at
  2. Are you already retired? field: click YES
  3. Lift the slider for Desired Retirement Income to the number you got at Current Lifestyle Cost (for Sarah and Matthew, they’ll choose $65,000 here)Step1 3
  4. Now use the Current Super Balance slider to change the number until the dark blue bars in your calculator’s graph reach both up to your Desired Retirement Income slider and over to the age that you wish your super to last until.


Current super balance 1

Our example

In this example, we’ve used an age in the early 90s, which is how long Sarah and Matthew think they will both live. Whatever the dollar amount is in the slider, that is the amount you’ll need in your super at your chosen retirement age to live your current lifestyle.

This means that Sarah and Matthew could need $850,000 at retirement if they wish to retire at age 60 and live a lifestyle similar to the life they’re living now.

They can play with the sliders int he calculator, such as revisiting the Age field, or changing the Desired Retirement Income amount they want to live on, and see what happens if they retire at a later age or if they choose to live on a lower amount each year.

You can also open the Assumptions tab in the calculator and change the Investment option (do this in the ‘Default return in retirement’ field) and Change Fees. For example, the ElectricSuper Income Stream’s current maximum annual cost is $800 (at 2023), which can make a big difference over the assumptions that are built into the calculator as a default.

Assumptions 1

For Sarah and Matthew, changing the assumptions to align with their likely situation (expected returns and fees on their income stream) could mean they may need tens of thousands, or even hundreds of thousands!, less at the time they retire.


Phew! Stop the clock! Did we get in under 5 minutes?

That’s a rough and ready guide to help you determine what you might need as an income in retirement to live like you do now and what you need to have at retirement to achieve that.

It’s not a guarantee, of course, and this calculation uses a lot of assumptions (as well as the calculations of what you spend now being basic in the first place).

There will be some details that you haven’t or can’t factor in (for example, current costs of feeding a family of 4 growing teenage kids will be more expensive than buying food for just a couple after the kids have left home, and your situation may change between now and retirement).

However, it is a quick way to get a basic idea of your situation.

Of course, if that all sounds like too much work, there’s an easier way (even if it’s less personalised).

Method 2: The ASFA Retirement Standard

A national standard exists. It is the ASFA Retirement Standard. ASFA reviews and updates it every quarter.

The standard is divided up for couples and single people as well as for people who wish to live a comfortable retirement versus a modest retirement, and for people under 85 and those over 85.

The ASFA Retirement Standard uses assumptions to calculate the figures, which includes home ownership, retirement at age 67 and a specified income while you’re working. The Standard also uses assumptions of what it thinks people spend on common expenses such as food, medical costs, household repairs, transport and more.

If you are a home owner and are aiming to retire at 67, you may find the ASFA Retirement Standard is enough information for you to determine what you’d like your super balance at retirement to be.

View the latest Retirement Standard online, to see both the lump sum you could need at retirement to live “comfortably” or “modestly” as well as how much you’ll spend on your lifestyle each week and year living on these standards.

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