IMPORTANT: SuperGuide does not provide financial advice. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Readers need to seek independent advice about their personal circumstances.


  1. Hi Trish,

    I’m a newbie to this website but I’m reading with great interest the succinct info provided.

    One question I have (which could be due to my misunderstanding of the notes for tables 1 and 2):
    - if the investment income is re-invested, what income will the retiree(s) live on? I thought the return (of 5% or 7%) provides the income for the retirees. Or is it meant to be “partially reinvested”?

    Thanks, Trish

    • Hi Trang
      Thanks for your email. Yes, the money is re-invested and the income is drawn from this pool of savings, so in effect you could say it is partially re-invested.

  2. Phil Manderson says:

    Hi Trish,
    Love this site- been checking in routinely for more than a couple of years- Always recommending it.

    Re the ASFA number Debates above: – I suspect the people write to debate the% rates that should be applied (to future inflation and Returns) are showing understanding of the Article. Fine.It met its objective- After that, whatever rates they prefer to use are their Personal choice.

    I went to the ASFA website to “Unbundle the Annual sum”, to see where our spend varies, and then ran into a problem: Each category needs a third level definition: in bullet form “to see what they put where”- That is..what are the sub components and based on what rate?

    Examples: Communications: (“2 mobiles, a Landline and Internet,?…)
    Health: i( Do 80% of Comfortable Couples pay Health Insurance of approx $xxx monthly, Balance Meds / pathology etc or Self Insure or or ?).

    They obviously must have determined that, in order to get their totals.

    Its really not a debate about WHERE they put “it”, but HOW MUCH did THEY allow, and in WHICH category it is summed. – then I can align our personal variances. Follow?

    I didn’t see an email address to ask- can you forward this to them pls?

    Thanks in anticipation,
    Phil M

    • Hi Phil
      Thanks for your email and considered comments. Yes, it is great that the article is a conversation starter for Australians thinking about how much they need in retirement. In reference to the breakdown of costs allowed by ASFA, they were originally source from a comprehensive study conducted by a university (and released in 2004), and then increased in line with CPI over time. More recently, the cost breakdown was adjusted to allow for changes in lifestyle, such as the use of mobile phones and the internet, and the popular uptake of private health cover.
      If you wish to discuss the details of the cost breakdown with ASFA, Ross Clare is the Director of Research, and you can contact ASFA via this link:

  3. I am 56, my wife is 58, I currently get about $19k from a CSS pension and U.S. investments, my wife gets about $21k from from U.S. teacher retirement and U.S. investments. We have $70k each in Australian superannuation (ING living super) and no mortgage on a house worth $550k.
    We are thinking of selling our capital gains free house and upping our super to $300k each, and starting retirement income streams to boost our total after tax income to about $84k. We would then rent for a while and maybe get a mortgage on a new, downsized home.
    In this scenario we will have gone from a retirement lump sum of around $570k including U.S. investments plus a home worth $550k, to having a retirement lump sum of over $1 million.
    Seems to fit within the parameters of living comfortably according to your tables. Is owning our home outright is a bit of a liability at our age, when the income it could generate could easily pay for rent or a new mortgage?

    • Paul – not a financial planner – but you may find it difficult to qualify for a new mortgage if you’re retired and not earning surplus income to pay back the loan – e.g. banks use formulae like repayments on (current interest rate + 2% buffer) can be up to 30% of your after-tax income

      and not having a roof over your head may work while you are foot-loose and traveling South America, etc. but if you want to live in Oz when the cart grinds to a halt that may put you in penury.

      Suggest call up NICRI on 1800 020 110 and have a free chat to Basil – a lovely guy –

  4. Why have 3 lifestyle categories: basic, modest and comfortable? It’s needless complication. For couples basic = $609.40/wk, modest = $626.98wk, hardly a categorical shift.

    • Hi Mike
      Thanks for your comments. When the ASFA study was first created, there was a marked difference between basic and modest lifestyles, especially for single people. The Age Pension was adjusted in 2009, which helped singles and narrowed the financial gap between basic and modest. Even so, we believe it is still helpful for readers to see the role the Age Pension plays in the retirement of many Australians, especially those with low balances, and we plan to include the 2 levels in the foreseeable future.
      We accept that this may be at the expense of simplicity, but it helps those with low super balances understand the advantage of even a few thousand more in super to the lifestyle in retirement.

      • Thanks for your reply.

        It seems like a ‘pension trap’. Settle for basic/modest with no effort. Or try to stash a million or two away for a more comfortable lifestyle. Or am I missing something?

  5. Hi just after your advice.

    I am turning 55 next February and currently have about $200000 invested in BT Superwrap 75% of which is in growth phase. My wife is 51 in December and has about $60000 in Rest. I have been working for nearly 40 years and in a job with little or no job satisfaction so am looking at possibilities of retiring early. I have applied for many jobs over the past twelve months with nil success which I feel has a lot to do with my age despite being suitably qualified. I have a house worth around $395000 which has a mortgage outstanding of $132000.

    Wondering if there is any chance of getting out early or is this a pipe dream. We would be prepared to downsize our house so we had no debts outstanding Many thanks Mick

  6. Peter Hewitt says:

    Hi Trish,

    I’m 58 and will be retiring mid next year. I’m happy with my savings and expenditures and am not relying on the pension. Lucky me – probably. But there’s a lot of hard work (and current lifestyle sacrifice) gone into that and some of it doesn’t sit comfortably with this article.

    Before I share my “pearls” let me say that I have been reading your articles for several years and I applaud the contribution you are making to superannuation awareness and education. Thank you. However, for those who want to be engaged and take a greater responsibility for their futures I think that there some refinements which I can suggest.

    OK – where to start?

    To me the only place to start was how much income will I need (note that means me and not ASFA or someone else). ASFA have provided some very useful guidance but, as you’ve said yourself, they may not have the same spending assumptions in mind as we do. For me to be comfortable I wanted to be able to live on roughly the same level of expenditures that I do now. So I itemized everything I spend money on and how much I spend. I then added the things we tend to ignore like fixing things or replacing them (the stove, the fridge, the TV all of which I expect to outlast at least once) and other maintenance expenditures. Then there are the special things – for me its overseas travel “in style” every few years while I can. It could also include a replacement car in a few years time. What I’m trying to address here are the things I have to save for (beyond my day-to-day spending). Call me a pessimist but then I added a safety margin because even the best laid plans go wrong. For example, it doesn’t take too much of an error in inflation assumptions and the comfortable life will start looking quite expensive in reality! Anyway I think you’ve got the picture that I was looking for a spending number that I could be happy with. In my case it was quite a bit more than ASFA suggests – but I’m really more happy with it because I understand it than because it was handed to me as a “one size fits all” solution.

    That was a long paragraph! Sorry but there’s more to come.

    With my budget worked out and itemized in a spreadsheet I keep reviewing and updating to reflect changes in costs etc. This is very important!

    The next step in the process was to calculate my lump sum magic number.

    Another of the points of disagreement I have with your article is how you work out your number. There are a few facts and a few assumptions which are needed to arrive at something that makes sense to me. One is my age now (meaning at any time I’m doing the calculation). The next is when I would like to retire (in my case the “full stop”). The gap between those two ages tells me two important things being -
    1. how long I have to achieve my savings goal; and
    2. in what year’s dollars my savings target should be expressed.

    This last is often poorly understood. If I’m setting a savings target I don’t want it moving away from me as my time frame gets shorter. For example if I can buy a car now for $30,000 but I actually want to buy my new car in say seven years time I’d need about $37,000 (rounded) at that time to buy the same car assuming a modest 3% inflation. So if a 58 year old needs a lump sum of say $500,000 in today’s dollars to start their retirement at 65 then the age 65 savings target is really something more like $615,000.

    Other important assumptions include the inflation factor to use. The “standard” is 3.5% and I note that Trish has used 3% in her calculations. But if we note the trends in the ASFA figures over time a rate of 4% or higher would seem to be justified. CPI statistics for retirees also support this view. Why? Well the basket of goods we need to buy (food etc) is likely to be a higher proportion of our post-retirement expenditure than pre-retirement (because we will have less discretionary income). Call me a pessimist but I have more comfort in using a higher inflation number. To explain, even if 3% proved to be right from the day we retired but inflation was 4% in the seven years leading up to retirement, that $615,000 would leave us short in “age 65 dollar” terms by some $43,000! So on day one of the rest of our lives we would already be behind life’s eight ball.

    Other assumptions we need to make include the expected rates of return – I say rates because our accumulation phase is taxable but the pension phase gets something like a 15% return boost because it’s tax free. Remember too, the returns should be consitent with your risk profile. Don’t assume a 10%pa return id you’re not prepared to invest outside of bank deposits!

    Finally (hooray they all say) you need to make some assumptions about how long you will live. This is real “finger in the wind” stuff. While average life expectancy tables can be useful we don’t all keel over according to an actuary’s table! You could live to 100 or more! I’m not saying that you need the same lifestyle at 100 as at 65 – perhaps the age pension would be quite comfortable by then. I’m just suggesting that you might like to assume that you will beat the odds and live a bit longer than average.

    This is real work – but with a target that you understand you can then plan to achieve it. You might need to save more or work longer or rethink your lifestyle needs. But you’ll you won’t be trying to live someone else’s definition of a comfortable life.

    Good luck and thanks for getting to the end of my rant.

    • Hi Peter
      Thanks for your contribution to the discussion – a great read, and considered comments. I regularly update these articles and I hope that everyone applies their own experience and circumstances as you have done – everyone has unique circumstances but these articles can trigger these thoughts (and hopefully actions) for people.
      In relation to inflation rate, you make compelling arguments, although another reader has suggested that my inflation assumption is too high. I have chosen to use 3%, and clearly state that as one of the assumptions.
      In relation to today’s dollars, yes, it is tricky to look ahead but the safest approach from my point of view is to look at what is happening today – I do flag the complexity of today’s and tomorrow’s dollars in the SuperGuide article
      Thanks again for your contribution.

    • Greg Nixon says:

      Great article Peter – thanks for that. I’ve done my own tinkering with figures and it’s refreshing to find (some) others seeing and taking heed of the inflation issue. I think it’s very overlooked by most. Inflation figures used by most “calculators” are conservative. I won’t go into the alleged manipulation of CPI, but needless to say, the only figure worth using (as a realistic inflation figure) at the moment is the underlying cash rate. For those who cant follow what I’m saying, I offer a simple question: Why don’t they adjust old age pensions by CPI? If you can answer that correctly, you’ll understand what I’m saying.

      Of poor friend Yogesh who initially replied to your email demonstrates a catastrophic lack of understanding relating to the simple (but compounding) effects of inflation on the value of ones capital.



  7. Yogesh Verma says:

    It is a very simple calculation. Why do people complicate it so much?

    Suppose your annual expense as of today is $ x. i.e. you can live comfortably this year if you get $ x.
    Assume you would live for n years more.

    In that case if you want to retire comfortably today, you need a corpus fund of $ x * n in your bank account today.

    For example, if your annual expenditure as of today is $10000. Suppose you are 20 years old today and so might live for 80 more years.

    So, if you have $10000 * 80 years = $800000 is your bank account today, you may retire immediately.

    This formula can be applied at any individual at any age and any country and can never go wrong (since inflation rate in any country will always be lesser than bank interest rate offered on fixed deposits). It automatically takes care of inflation, taxes, insurance, medical and incidental expenses, etc.

    However, it assumes the following about the person who intends to retire.

    1. He/She already owns a house (since property prices are highly unpredictable and play havoc with your investments). Alternatively, if he/she is staying in a leased accommodation, then cost of rent should be accounted in annual expenditure.

    2. He/She would always invest the balance corpus fund in fixed deposits offered by reputed banks which are safe. He/She would never risk money on equities or shares or anything else which does not guarantee fixed returns.

    3. He/She would maintain his/her current standard of living and not indulge in unnecessary expenses such as buying a luxury car, expensive jewelry or foreign trips.

    • gee Yogesh – you can live on $10kpa when ASFA reckons the most basic lifestyle for a single person (Age pension only) costs $20kpa ? – good luck with that ! Using $20kpa your formula for 80 years needs $1.6m

      my partner reckons she spends $10kpa – but she’s not paying any housing or car costs, just the odd food shopping.

      My simple formula is the 4% rule – based on decades of analysis, one is most likely to be able to draw down 4% of your capital each year without it running out.

      On my calculations that we spend $37kpa as a couple ($47kpa including a couple of overseas holidays a year) that would require capital of $925k (or $1175k).

  8. Hi Trish!
    Just read your updated article on how much super required for retirement based on the ASFA Retirement Standard and have a couple of observations:

    1. The amount of $56,339 for “comfortable couple” may be incorrect. My summation of those data comes to $56,183.40. No significant impact on your analysis.
    2. In your tables “Retiring – on investment returns of 5% or 7%, I think there is some mixup between nominal and real returns. I cannot reconcile the $1.05 million lump sum with a 5% real or nominal rate. However, if I use a real rate closer to 2%, the numbers start to align.
    Is it possible that the annuity calculations were done with REAL rates? If so, what expected inflation rate did you use?
    May be worth checking those numbers in the new table …
    Norm Sinclair

    • Hi Norm
      Thanks for your email and questions. I rely on data from the ASFA Retirement Standard for the lifestyle costs and they indicate $56,339 (it is not necessarily the total weekly costs by 52, rather it is worked out over 365 days I recall). If are referring to the lump sum amounts, I do use some rounding to keep the lump sum figures in a simple form.
      In response to your 2nd question, yes the lump sum amounts are in today’s dollars, which I explain in the table notes and assumptions. I assume 3% inflation each year.
      I will review, and perhaps flag the today’s dollar aspect earlier in the article.

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