How much annual income will I need in retirement?
Wayne Strandquist 16/01/2025, 9:00:00 am One of the most frequent questions asked by pre-retirees is “How much income will I need annually in retirement?“. However, retirement income is often very much an individual thing. How long is a piece of string? , you might say.
How much annual income will I need in retirement?
One of the most frequent questions asked by pre-retirees is “How much income will I need annually in retirement?“. However, retirement income is often very much an individual thing. How long is a piece of string?, you might say.
But, the Association of Super Funds of Australia (ASFA) publishes an updated ‘Retirement Standard’ every quarter to help retirees estimate the income they will need to fund various lifestyle expectations.
What is the Retirement Standard?
The Retirement Standard is calculated and published every quarter by ASFA to help people prepare themselves financially for retirement, and to budget after retirement. It estimates the total annual cost of living for either a comfortable or modest lifestyle for retired singles and couples aged 65-84, and also for singles and couples around age 85.
Each quarterly release is updated to include the effect of inflation and provides detailed breakdowns for all types of items and expenditure.
ASFA Retirement Standard (September Quarter 2024)
| Modest | Comfortable | |
|---|---|---|
| Couples aged 65-84 | $47,475 per year | $73,031 per year |
| Singles aged 65-84 | $32,930 per year | $51,814 per year |
How can this help with budgeting?
The published standard enables you to compare with your current expenditure and calculate whether your spending in retirement is likely to be more or less than the retirement standard estimates.
Assumptions
Each estimate assumes that singles or couples live in their own home that they own outright. The estimates do not include rent or mortgage payments. It assumes that the retiree/s receive a part Age Pension and will draw down all their retirement savings.
How does comfortable compare with modest?
A modest lifestyle is an improvement on what you could afford if your only income is a full Age Pension. The comfortable standard provides more income for recreation and leisure, clothes, household goods and private health insurance. You could also travel more domestically trips and an overseas trip now and then.
It’s expected that a couple would need combined retirement savings of $690,000 for the ASFA comfortable lifestyle. A modest lifestyle would require as little as $100,000 in retirement savings and assumes the Age Pension and other Centrelink benefits will cover the majority of the living costs.