When it comes to retirement, most people know they’ll need money — but few know how much. It’s one of the biggest financial questions you’ll face: how much will I actually need to live comfortably once I stop working? The answer varies depending on your lifestyle, health, goals and where you plan to live. To get a clearer idea of what you’ll need, it helps to start with the basics. One of the simplest ways to get a ballpark figure is to plan your future with our super retirement calculator, which can help you estimate your income and expenses based on your current savings and spending habits.
From there, you can work through the steps below to break down your needs and build a plan that suits your ideal retirement.
Understand Your Desired Lifestyle
The cost of retirement largely depends on how you want to live. Are you dreaming of international holidays, or are you happy with quiet weekends at home? Will you own your home outright, or still be paying off a mortgage or rent?
Think about:
- Travel and leisure activities
- Dining out, hobbies and entertainment
- Ongoing health and medical expenses
- Whether you’ll downsize or relocate
Once you’ve outlined your future lifestyle, you can start estimating the costs that come with it.
Estimate Your Annual Living Expenses
A helpful starting point is to calculate what you currently spend each year and consider how that might change in retirement. Some expenses may decrease — like transport costs if you no longer commute, or work-related clothing and lunches. Others might increase — like health care or travel.
Common categories include:
- Housing (rates, insurance, maintenance)
- Utilities and groceries
- Private health cover and out-of-pocket medical expenses
- Insurance (car, home, life)
- Personal expenses like clothing, haircuts, and gifts
Many financial planners suggest a rule of thumb: aim for 65–75% of your current income per year in retirement. But personal calculations will always be more accurate.
Consider How Long You’ll Need the Money
While it’s impossible to know exactly how long you’ll live, it’s important to plan for a longer retirement than you might expect. Australians are living longer, with many reaching well into their 80s or 90s. If you retire at 67, you could need to fund 25–30 years of living expenses.
When calculating what you’ll need, factor in inflation, rising health costs and unexpected expenses along the way.
Add Up Your Expected Income Sources
Your retirement income may come from several sources, including:
- Your superannuation balance
- The Age Pension (if eligible)
- Investments (shares, rental income, term deposits)
- Savings outside of super
- Any ongoing part-time work or freelance income
List each source and estimate how much you’ll receive per year. This will help you compare your income against your estimated expenses — and highlight any gaps.
Don’t Forget One-Off Costs
While most budgeting focuses on yearly expenses, it’s wise to factor in occasional big-ticket items, such as:
- Buying a new car every 10 years
- Home renovations or major maintenance
- Family events like weddings or helping adult children financially
- Travel, especially overseas trips
Setting aside funds for these larger costs can help you avoid drawing down your retirement savings too quickly.
Regularly Review Your Plan
Your idea of retirement may evolve over time. Health, family dynamics, or lifestyle choices can all influence your plans. That’s why it’s important to revisit your retirement budget regularly and adjust it as needed. Tracking your super balance and investments yearly can keep you on course.
Planning for retirement might feel overwhelming at first, but with the right tools and a bit of forward thinking, it becomes much more manageable. Understanding what your future lifestyle will cost, how long it might last, and what income you’ll have available puts you in control. The sooner you start thinking about it, the easier it is to adjust and take action, ensuring your retirement is everything you want it to be.
