What is a safe amount to spend each year in retirement to make sure your Super doesn’t run out? 74



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The average retiree in Australia is sadly struggling with a much lower super balance than the amount recommended by Australian Superannuation Fund Association and more than 70 per cent of Australians over the age of 65 rely on the full or part age pension as their primary source of income when they retire. Superannuation for most of today’s retirees will act as a supplement only.

The suggested superannuation balance for couples wanting to live comfortably sits at $510,000 and for a single sits at $430,000 whereas in reality the average male retiree today has only $197,000 in their super accounts and female has $105,000.

So if you look like the average retiree today, you are limited to what you can achieve with the savings you have. But how much do you need, and how much will create a reasonable retirement, should you be in these entirely “average” circumstances?

The golden rule of retirement withdrawals said that if retirees withdraw 4 per cent from their savings every year (or $4 for every $100 that they have in retirement savings), adjusted for inflation, their nest egg should last 30 years. Sadly, last year, in a report issued by the Financial Services Institute of Australia, FINSIA revised this number down to 2.9 per cent per annum for a balanced portfolio to ensure that the savings last for a 30 year retirement. Any faster and they believe that people will run the risk of running out of retirement savings before they die, and nobody wants that to happen.

So when calculating a retiree’s potential income this number is always of critical concern. But there are also three other important things you need to think about when planning for your retirement drawdown levels:

  • Getting off on the right foot in the early years of retirement. It’s not just the drawdown rate that can impact your financial wealth, but also the sequence of your investment returns.   Portfolios that suffer negative returns in the first years of drawing down in retirement can find it difficult to last if the capital balance on which planning has been done has been damaged. A plan and investments that allow for growth and careful risk management in the early years of retirement is well worth considering to ensure you don’t run out of retirement savings. Once those years are gone, you can’t get them back.
  • Properly understand your risk profile. This is your general ability, willingness and need to take risk in order to reach your financial goals. For some, simply retiring in moderate circumstances may require that you take risk on higher growth investments to do so. Ensure you understand your risk profile, needs and interests in exposing your investments to higher growth and/or higher risk products and go into those investments with an awareness of how actively you will need to monitor them.
  • Be very aware of how much money you need to fund your lifestyle. Many people in retirement have to adjust their lifestyle to suit their available money, it is just a fact of life. But for others, through careful planning you can set your expectations up much earlier by saving more and investing in asset classes and products that can appropriately support your aspirations.


Has anyone ever suggested to you a “safe” drawdown rate for your superannuation? 

This article is intended to provide general information only and has been prepared without taking into account any particular person’s objectives, financial situation or needs. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain financial advice specific to their situation before making any financial investment or insurance decision.


For more information contact MLC by clicking here.

Shaune Egan

Shaune Egan is Head of Retirement Solutions, Segment Development at the National Australia Bank, focused on developing retirement strategies and solutions for financial advisers and their clients. Shaune holds an MBA from the Melbourne Business School, a Graduate Diploma in Applied Finance and Investment, a Diploma of Financial Planning (DFP) and a Retirement Management Analyst (RMA) certification from the Retirement Income Industry Association (RIIA). He is Fellow of FINSIA and Graduate Member of the Australian Institute of Company Directors.

  1. What super? Lol

    2 REPLY
    • The compulsory super that everyone has been receiving that have worked over the last 23 yrs…that is if people have been working for wages starting back in 1992.

    • I know what super is just that my circumstance did not provide much at all. My wife and I are happily living on the OAP

  2. The trouble is none of us know how long we are going to live and how healthy and mobile we will stay. We are at a stage of our lives where if we want to do or see something it is unrealistic to put it off till “later”. The sad reality is as we age there may not be a later. I am 63 but my husband 77, all our medical setbacks so far have been minor but they are becoming more frequent. Sure you have to budget and not be entirely irresponsible with any nest egg, but after years of working, and in our case only rare real holiday escapes, live life and don’t leave it all to your kids.

    3 REPLY
    • I completely agree. I am divorced and at age 60 last year had unexpected double heart bypass surgery. All good now but frightening. So I am using up my long service leave and then retiring so I can LIVE a bit before I die. Nothing extravagant, but I’ve penny pinched all my life and am sick of it.

    • Live for now sadly lost my hubby 9 yrs this year aged 53 u never know what’s around the corner!! His bit if super helped us survive the six months he was ill I just retired last nov as work was awful even after 22 yrs in the job. Now retired love each day feel as if a weight has been lifted using my bit if super till eligible for the pension!!! Used to living on a tight budget!!!

    • It’s only money, enjoy your life as you see it. Holidays over seas etc are fine, but don’t think you have to keep up with the Jonses!! Just live, no matter at what cost!!

  3. hardly have any super just the aged pension and I do the school xing to I can at least eat as I don’t own my home still paying it off and with the bills its impossible just to live on the aged pension

    1 REPLY
  4. I’m not taking any more advice from any so called expert financial advisors. All the ones I have used have charged me exorbitant fees so they can lose my savings

    12 REPLY
    • Yes I was quite staggered by what our adviser charges and also the pension fund they recommended. Not far enough into yet to see how good the advice was.

    • You don’t need their advice Bob … Speak to others who are managing. Aged clubs etc… My mum lived on her own on a pension since age of 48 when she was widowed… She had everything she wanted and then some… All bills paid as soon as they come in and she saved as well.. Died in August last year had enough to bury her and her own service with some left over to pay for her rates water etc til her house is sold.. I’m not like her wish I was. But we can learn from them…

    • I see the financial planner at bank. She said we have enough plus to see us through. The family business which has been operating for more than 100 years is being crushed a bit by the Giants. Bunnings and Masters. I like to shop locally if the service is good.

    • The only expert I would listen to is one that has taken his own advice and done well. I guess the question to ask such a person then is why are you doing this when you have the resources to be doing more enjoyable things?

    • Lots of nice replies to my bleat about financial advisors. I now know that I can make the sensible decisions to keep myself viable with enough funds to last me.

    • We listened to a financial advisor a few years back and on top of it costing me a lot of money for his advise, we lost $13.000 on his recommendations. Never again, now manage our own SMSF and have been doing very well.

    • Centrelink has a very good financial advice service, free

    • Stick you money in your matress and pray you dont have a fire .Every time I have relied on a financial adviser the have charged an exhorbitant amount then lost me money .

    • Bob, personally. I would not confess my stu***y on a Public Forum…………..
      Really mate, do you think Any FA is interested in your wellbeing or his.
      The name of the game is., “Extract money out of the Next guys Pocket”, Ever since money was invented……….

  5. We have a small amount of super…..our “grand plan ” is to spend most of it and when it runs out we will have had a good time and we won’t want to do much. The kids will have the house and our funerals will be paid for so half a house each will be what they get. We don’t have much but we intend to go on a couple of cruises and a few small driving holidays. We own our home and don’t owe any money so ( hopefully) can survive on the pension

    4 REPLY
    • We have been retired for 20yrs on a small super amount , we go on cruise each year and short holidays in OZ , if you budget you can live on a pension providing your home is paid for & no money owing. We have been blessed with good health.some people leave it too late to retire

  6. I have no savings for my retirement

    4 REPLY
  7. As soon as super came in I started adding as much as I could afford to it, sometimes only $20 but so glad I did, now in my mid 60s when I retire I will have a good bit built up.

    3 REPLY
    • Me too Lyn. I added 6% of my pay each fortnight from 1992 as there was the incentive for that particular super fund that the employer added a lump sum when you left. I left 5 years ago to retire but haven’t touched my super as hubby still working and we can just manage on his wage. I’m 63.

    • lyn great work so many of us just lived for today blew the lot and are the leaders of the POOR ME brigade ..

    • Totally agree! Those whinging “what super?” Where have they been for the last 20 years! Maybe not in the earning workforce

  8. I will have very little Super. I guess I will live in a cardboard box under a bridge and exist on the Aged Pension.

  9. Oops. I have a reasonable amount in my super fund but I just did the sums and based on the information above I realise I am drawing down too much from my super for it to last 30 years. But perhaps me needs will be much less in 15 years time when I no longer have the desire or energy to travel. It’s a balancing act for sure.

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