How much money you’ll need to retire

If 2017 is the year you retire, then you might be asking yourself – how much money do I need

If 2017 is the year you retire, then you might be asking yourself – how much money do I need to retire?


The truth is, the answer isn’t black and white.

In fact, how much is ‘enough’ depends on how much you’re comfortable on and what your costs are.

Just ask the experts!

Head of Advice at Dixon Advisory Nerida Cole said there’s a lot of variation when it comes to determining how much is ‘enough’ to fund your retirement.

She believes reviewing your budget and working out your expenses is the key part of coming up with the ‘enough’ figure for you to retire.

“In the years just before  your retirement, chances are your mortgage is significantly reduced and in most cases the kids are out of home,” she said.

“You should be looking at these things as they start to reduce and allow yourself to see what your core expenses are.”

Those core expenses are an important part of the budgeting process and will help you work out how much is ‘enough’.

So what are your core expenses?

Things such as your debts, health costs, bills, eating out and travel costs all form your core expenses.

Nerida advises that when budgeting, you should always make sure you have enough to cover those core expenses.

“Then you should look at what you’d like to do – holidays, renovations etc,” she said.

“When you retire the extra travel costs of going to work you’re likely to replace with holidays and short trips with family.

“The Association of Super Funds of Australia (ASFA) found with their research that when you reach the later stages of retirement – from 80 onwards the costs of living don’t come up too much.”

What about your health costs?

Well, statistically if you’re a 65-year-old woman, you’re likely to live another 22 years on average.

“The fact your cost of living ease in the later years will offset some of what you might expect with health costs,” Nerida says.

“But if you do have a health condition, you do need to make sure those cost are catered for.”

So you’ve done some sums and you’re worried you won’t have enough to retire on?

Nerida suggests this solution to you concerns.

“If your savings are not going as well, you’re not saving as much as you thought or your earnings are not as high as predicted, you have the flexibility to extend your working life,” she said.

“You may need to work a few more years than you thought or reduce your expenditure and make some savings.”

Working on a part time basis can also help give you extra money when your retire, as well as keeping you engaged and mentally challenged.

You should also be sure to check your eligibility for the aged pension.

Nerida also advises to start planning for retirement as early as you can.

Apparently, the earlier you plan, the more time you have to ensure you have ‘enough’.

“I would say it’s important to talk to someone as early as possible,” she advises.

“Start making some decisions about when you want to exit work.

“Putting your money away as early as you can is good from a compound interest point of view – it’s a lot easier than trying to save after retirement from a fixed income from your super or aged pension.”

Experts like Nerida recommend you look at guides released by associations  such as ASFA to get an idea of your ‘enough’ figure.

“ASFA’s figures show at age 65 a couple will have a comfortable standard of living if they have a combined income of close to $59,000 to live on per year,” she said.

Are you retiring this year? Do you think you have enough money for retirement?

  1. Suzanne  

    and how do we achieve this? As a woman who put her career on hold so that husband could be advanced while I took care of the children and did part time work or work that fitted in with the household, only to be left in the lurch after 27 yrs of marriage.With a house worth just over $100 thousand, I was better off than some. I invested carefully and now have a home that is freehold, but it is in the country, which is difficult if medical services are needed. Helping with children’s education, weddings etc, no money coming from their father – I have done the best I can and now face the possibility of no money in my old age. I have always worked and would prefer not to have to rely on the pension, but one person cannot earn what two people can, and men have always been paid more to do the same work. I am very happy with my life, with the exception of lack of money, and am proud of what I have achieved, but am sick of people telling me I need x amount in super/savings/investment to retire. It just ain’t going to happen for a large portion of the retiring population. I am now 67 and continue to work as is a a temp when I can. And take lotto tickets!!

  2. Frank  

    I have just retired – we have lived frugally for decades – while others scoffed at my frugality, we now have enough while most around me scoff at the idea that they can ever afford to retire.

    One big cost I see – if you are still renting in retirement – our housing cost of around $7kpa for our paid-off home – could be more like $37kpa if we had to pay rent for similar to our current home – so that’s an extra $30kpa needed.

    On the 25x theory, that suggests you would need an extra $750k in retirement funds to support a renting lifestyle that we don’t need to with a paid-off home.

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