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My retirement planning diary (Part 3): How much am I likely to spend in retirement?

Read part 1 and part 2 of Barbara’s Retirement diary.

Like everyone preparing for retirement, I’m about to take a step into the unknown. One of those unknowns is how much my new lifestyle is going to cost.

So, after spending the past few months tracking my super balance up and down with every zigzag in Donald Trump’s tariff policy, it’s time to focus on the other side of the ledger.

I need to work out how much I’m likely to spend to lead the life I want to live in retirement. Only then can I work out how much income I’ll need and whether I have enough super to take the plunge.

I’ve drawn up a preliminary annual budget but, to get the ball rolling, I looked at some popular methods of estimating retirement income needs put forward by various industry bodies. These boil down to two main approaches: target replacement income and budget standards.

Target replacement income

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Responses

  1. Melnaie Ballard Avatar
    Melnaie Ballard

    I am enjoying this series, we are in our mid 50’s and planning for retirement and are living off our retirement income at the moment. We have purchased an economical campervan to allow us cheap travel around Australia. When retired we will have the leisure of last minute bookings and taking up great deals with little notice of travel dates, I am really looking forward to that time. Also thank you for the link to concession cards, that was interesting reading. A frugal mindest for eating can lead to large savings on travel, we love to save money by eating cheaply.

  2. Steve Ryan Avatar
    Steve Ryan

    My experience is that – liberated from the constraints that working / employment requires in terms of available time and energy – in the early years of retirement that your spending requirements will be greater than your pre-requirement spending. This assumes you are in good health etc.

    1. Barbara Drury Avatar
      Barbara Drury

      Hi Steve,

      I think you’re right, especially for those of us with travel high on the agenda and in good health (although poor health can also be costly). Which is why it’s so important to have a clear idea of what your personal retirement will look like. This is something I’m working on with a retirement coach and will write more about in coming months.

      Barbara

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