How Much Super Do I Need To Retire At 65 in Australia? The Real Numbers You Need to Know

It can be stressful to think about retirement. As an Aussie who plans to retire at age 65, I’ve spent countless hours trying to figure out how much super I’ll need to live comfortably. Let me tell you, it’s not as easy as you’d think!

There isn’t a magic number that makes everything work. What you need for retirement depends on how you live, your health, where you live, and your personal goals. Don’t worry, though. I’ve scoured the most up-to-date information from the Australian Retirement Trust, Moneysmart, and other trustworthy sources to make this guide.

The Big Question: How Much Super is Enough?

According to the Association of Superannuation Funds of Australia (ASFA), as of March 2024 you’ll need approximately

• $595,000 in super savings for a comfortable retirement as a single person
• $690,000 in super savings for a comfortable retirement as a couple

These figures assume you:

• Own your home outright (no mortgage)
• Are in relatively good health
• Will receive some Age Pension

But what does “comfortable” actually mean? Let’s break it down

Understanding Different Retirement Lifestyles

There are generally three retirement lifestyle categories in Australia:

1. Budget Retirement (Age Pension Only)

If you retire with just the Age Pension and minimal super, you’ll live on a tight budget where:

• Home or car repairs will be limited or impossible
• You won’t have private health insurance
• Meals out will be limited to specials at clubs or cheap takeaway

2. Modest Retirement

With a modest lifestyle, you’ll have more than just the Age Pension, allowing for:

• Basic home repairs and a cheap car
• Basic private health insurance
• One annual holiday within Australia

3. Comfortable Retirement

This lifestyle lets you enjoy a wider range of activities and services:

• A decent car with ability to renovate your home
• Top-level private health insurance
• Regular restaurant dining and activities

Annual Spending in Retirement

ASFA provides these yearly spending figures based on March 2024 data:

For ages 65-84:

• Singles (modest): $32,915 per year
• Singles (comfortable): $51,630 per year
• Couples (modest): $47,387 per year
• Couples (comfortable): $72,663 per year

For ages 85+:

• Singles (modest): $30,669 per year
• Singles (comfortable): $48,075 per year
• Couples (modest): $43,891 per year
• Couples (comfortable): $67,050 per year

The Two-Thirds Rule

A common rule of thumb suggests you’ll need about two-thirds (67%) of your pre-retirement income to maintain your standard of living in retirement. This assumes you own your home outright.

For example, if you earn $90,000 annually before retirement, you’d aim for around $60,000 per year in retirement income.

How Long Will Your Money Need to Last?

If you retire at 65, you’ll likely need your super to last 20+ years. According to the Australian Bureau of Statistics (2022), the average Australian can expect to live well into their 80s.

This means planning for approximately 25 years of retirement if you stop working at 60-65. You can check your specific life expectancy using Australian Retirement Trust’s QSuper Life Expectancy Calculator.

Factors That Impact How Much Super You Need

1. Housing Situation

Whether you own your home, have a mortgage, or rent makes a HUGE difference to your retirement needs. Renters will need significantly more in retirement savings.

2. Health Status

Your health and potential medical costs greatly impact your retirement budget. Budget for unexpected medical expenses like hip replacements or other surgeries.

3. Aged Care Considerations

The deposit for an old age home is one of the most expensive things that could happen. Another thing you may need to plan for is in-home care for the elderly.

4. Government Benefits

The Age Pension can supplement your retirement income. As of 2024, the maximum Age Pension rates are:

• Singles: Approximately $27,000 per year
• Couples: Approximately $40,500 per year (combined)

The amount you receive depends on your assets and income.

5. Other Income Sources

Consider other potential income streams like:

• Investment income
• Casual work
• Other savings
• Downsizing your home

Are You on Track? Super Balance By Age

While everyone’s situation is different, here’s a rough guide to see if you’re on track:

Don’t panic if you’re behind! There are ways to boost your super.

Ways to Build Your Super Before Retirement

If your super balance isn’t where you want it to be, consider these strategies:

1. Consolidate your super accounts to reduce fees
2. Make extra contributions through:
   • Salary sacrifice (pre-tax)
   • Personal contributions (potentially tax-deductible)
   • After-tax contributions
3. Review your investment options to ensure they match your risk profile and timeframe
4. Check your insurance within super to make sure you’re not paying for unnecessary coverage

Retirement Income Options

When you do retire at 65, Australian Retirement Trust offers several options:

1. Retirement Income account: Regular payments from your super
2. Transition to Retirement Income account: Regular payments while still working
3. Lifetime Pension: Tax-free payments for the rest of your life

These can be mixed and matched to suit your needs.

What If I Can’t Save Enough?

If reaching these super targets seems impossible, don’t despair! You have options:

1. Delay retirement: Working even a few extra years can significantly boost your super
2. Work part-time: Reduce hours rather than stopping completely
3. Downsize your home: Release equity to fund retirement
4. Reassess your retirement lifestyle: Adjust expectations to what’s financially feasible
5. Seek professional advice: A financial adviser can help find strategies specific to your situation

Real Talk: My Personal Experience

I’ve realized that planning for retirement isn’t just about hitting a specific number. It’s about understanding what kind of lifestyle I want and being realistic about costs.

At first, I was freaking out because my super was nowhere near the “comfortable” target. But after doing a detailed budget and realizing I don’t need all the bells and whistles of a “comfortable” retirement, I feel more confident. I’ve increased my contributions and am looking at working until 67 instead of 65.

The truth is, everyone’s retirement journey is different. Some of my friends plan to travel extensively and need more, while others are happy with a simpler lifestyle and require less.

Getting Personalized Advice

Since retirement planning is complex and everyone’s situation is unique, consider:

1. Consulting with a financial adviser
2. Using your super fund’s advice services (many offer free basic advice)
3. Using online calculators and tools like the Moneysmart retirement planner

Final Thoughts

So, how much super do you need to retire at 65 in Australia? The simple answer is: it depends on the lifestyle you want.

At minimum, aim for the ASFA comfortable standard of $595,000 (single) or $690,000 (couple) if you want more than a basic lifestyle. But remember, these are just guidelines.

No matter how old you are or how much money you have in your super, the most important thing is to start planning now. Thanks to compound interest, even small increases in the amount you put in can add up to a lot over time.

Have you checked your super balance lately? What steps are you taking to boost your retirement savings? Whatever your current situation, there’s always something you can do to improve your retirement outlook.

Remember, it’s never too early or too late to start planning for a better financial future!

Average super balances by age and gender