6. Your retirement number

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Step 6, your retirement number
Step 6, your retirement number
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The amount of money each person needs to retire will be unique to their personal situation, lifestyle, and living arrangements.

What is a retirement number?

A retirement number is basically the amount a person needs to fund their retirement.

It can either be expressed as a total lump sum you're aiming to save through your super, or a target for what income you will have to live off in retirement from your super and other sources such as the Age Pension.

In this guide:













Your retirement number

A quick estimate

You may see numbers quoted in the media estimating the amount a single person or couple needs to be able to fund their retirement.

The Association of Superannuation Funds of Australia's (ASFA) retirement standard is a common example.

Another one is Super Consumers Australia's Retirement Savings Targets.

These resources give general estimates for the magic number needed based on different target annual incomes in retirement. They can be helpful reference points.

BUT...be wary of relying too much on these estimates. For starters, these two examples give very different estimates for how much you'll need. They also rely on assumptions that might be very different to your situation.

It's worth taking a closer look at the factors that could determine how much YOU will need.

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Think about your lifestyle

The amount of money you'll need in retirement will depend on your lifestyle. Think about your current lifestyle but also what you'd like to be able to do in retirement.

  • Do you plan to travel and take holidays frequently?
  • What hobbies will you need to budget for (e.g. theatre tickets, golf club and other leisure memberships)?
  • Will you dine out often?
  • Will you have any large one-off costs to support the lifestyle you're aiming for (like purchasing a caravan or boat)?
  • Your intended lifestyle 
  • You intended spending habits
  • Any outstanding debts (mortgage)
  • Total superannuation and other investments
  • Regular returns (earnings) you make on investments
  • Income you will receive from other sources
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Factor in your other costs

You won't just need money to fund a lifestyle of leisure. You'll still have many of your current costs to budget for, such as:

  • Rent or a mortgage if you haven't paid off your home by the time you retire
  • Insurance premiums
  • Groceries and other necessities
  • Healthcare costs (which will likely increase as you age)

And think about any family-related expenses, such as helping your children with a home deposit, or contributing towards the cost of a wedding.

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Now think about your income sources

To figure out how much you'll need to have saved up by your target retirement age, you'll need to think about all your potential sources of income.

For a lot of people their super and the investment returns it will hopefully continue to generate into retirement will make up a large portion of their income.

But there may be other sources available:

  • The Age Pension (if you're eligible)
  • Income earned from investments held outside of super (e.g. through dividends or selling them)
  • Employment income if you continue to to work after retirement age (check the rules on how this may impact your Age Pension)
Forecast your savings

Watch out for inflation

When calculating your needs in retirement, which may be many years away, remember that money you have now will almost certainly be worth much less by the time you retire.

This is because of the gradual increase in prices, or inflation.

For example, will the interest you earn on money held in a bank savings account keep up with inflation? Or will it go backwards in real terms?

Will you have enough?

So you've worked out your potential costs in retirement to support the lifestyle you want. And you've calculated how much you're likely to have through different sources of income.

What do you do if you don't think you're going to have enough?

Here are some steps to consider:

  • Return to guide two in this series (get your super on track) and consider steps to boost your super savings.
  • Consider whether delaying your retirement is an option, or a transition to retirement strategy, so you're earning an income for longer.
  • Get advice. A financial planner will advise you on potential options based on your circumstances.

Even if you think you will have enough to retire, it's no harm to consider options for boosting your retirement income. Having a buffer will give you greater peace of mind, and it might mean the occasional extra holiday too.


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Written by

Helen Baker

Financial Expert

Helen Baker

Reviewed by

Sean Callery Editor Money.com.au


Sean Callery

Important information: Any advice or information on this site is of a general nature only and has not taken into account your personal objectives, financial situation and needs. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your personal objectives, financial situation, and needs. Helen Baker is an Authorised Representative(s) of Godfrey Pembroke Group Pty Ltd ABN 38 078 629 973, AFSL number 245451, an Australian Financial Services Licensee, with offices at The Bond, Level 3, 30 Hickson Road, Millers Point NSW 2000.