A guide to retirement planning in Australia

Retirement planning to date has been mainly focused on the financial challenges found in that stage of life; however, quality of life and a sense of emotional well-being become important elements of retirement, too.


How much do you need to be comfortable in retirement?

Category Savings required at retirement Annual spending in retirement, age 65 Annual spending in retirement, age 85
Comfortable lifestyle for a couple $640,000 $68,014 $62,237
Comfortable lifestyle for a single person $545,000 $48,266 $44,851
Modest lifestyle for a couple $70,000 $44,034 $40,656
Modest lifestyle for a single person $70,000 $30,582 $28,379

Source: ASFA Retirement Standard—September Quarter, 2022. All figures are in today’s dollars, using 2.75 percent average weekly earnings as a deflator and an assumed investment earning rate of 6 percent per annum.


You might hear in general reporting that you need 1M for a comfortable retirement. Based on the reports from the Association of Superannuation Funds of Australia(ASFA), you need approximately $68,000 pa to live a comfortable retirement as a couple. To have this level of income, you only need $640,000 in retirement savings, assuming you have 6 percent investment returns. You may receive full or part of your Age Pension when you retire, and you need to top that up with super funds for the shortage.

However, everyone has their own comfort level. If you would like to maintain your current lifestyle, it is advisable to do a proper budget with an adviser to determine how much you currently spend and how much you expect to spend in retirement. If you hope to travel overseas significantly more, or you acquire expensive hobbies, you may need more.

Lifelong cash flow modeling is a financial planning tool showing you in projection if you can achieve your desired lifestyle with the money you have. It is a very effective tool for retirement planning, assisting you to accumulate enough wealth to generate sufficient income at retirement, ensuring you don’t run out of money before you run out of life.

Retirement income

The Australian retirement income system is based on three pillars – the Age Pension, your superannuation, and your assets outside superannuation.

The investment strategy you apply when you work full-time may need to change when you retire. An important consideration when retiring is how to invest all your savings and assets so that you can replace your wage with a regular income when you need to. These assets must be managed to try to balance the three key needs of retirees:

  • income needs—retirees want certainty of income
  • longevity needs—retirees want to ensure that their retirement income lasts
  • capital needs—most retirees want flexibility in accessing a lump sum during retirement for numerous possible needs.

There is no single investment product that meets the three key needs of retirees, so you may need to use a combination of them when working with your adviser. The main retirement income streams include account-based pensions, annuities, and other investments including property and shares.

You may wish to adjust your investment risk to ensure that you have enough money to last throughout your retirement, and also to ensure that you have enough to earn sufficient returns so that inflation will not reduce your retirement savings over time.

Balanced life in retirement

Retirement is a time when people can rethink how they wish to spend the next third of their life they are entering. The good news is that in retirement, you will have plenty of time to pursue your dreams. The bad news is that you may have too much time. You hope for a life of ease when you retire, but you may have a life of boredom instead. It is the perfect time in your life to switch the primary focus of your life from earning a living to chasing your hobbies and dreams.

Successful retirement involves balancing all facets of life in the journey—your family, recreation, community service, health and fitness, and personal growth. The funds that you have been saving so diligently for your retirement are valuable only because they add value to the quality of your life.


Planning your retirement is complex. Working with a trusted adviser can help you clarify confusion regarding how to best prepare for your retirement financially and psychologically. After all, you have been preparing for life, not just for retirement.

Personal finance book | Your Best Life

Written more like a novel than a self-help guide, Your Best Life is designed to walk you through the journey of financial planning.