Start with the retirement you expect to fund
No single balance is right for everyone. Housing costs, relationship status, location, health, retirement age and desired lifestyle can change the answer by hundreds of thousands of dollars. Begin with an annual spending estimate in today’s dollars and state whether you expect to own your home outright.
Build the estimate from your actual spending rather than adopting a benchmark as a target. Remove work costs that may stop, add health, travel and maintenance costs that may rise, and include irregular expenses such as vehicles, renovations and family support.
Add every likely income source
Super is only one part of retirement income. Include Age Pension if you may qualify, partner income, savings, investments, rent, defined benefits and part-time work. Note when each source starts and whether it rises with inflation. Age Pension rates and thresholds change, so use current Services Australia figures in any calculation.
A retirement calculator can translate contributions, fees, returns and retirement age into a projection, but its assumptions are not a forecast. Compare at least a central case and a cautious case, and express results as an income range rather than a precise promise.
Close a gap using more than one lever
If projected income is below desired spending, options include contributing more, reducing fees, changing an unsuitable investment approach, working longer, retiring gradually, spending less or using other assets. Each has a different cost and level of control. A later retirement can help three ways: more contributions, more investment time and fewer years of withdrawals.
Review the estimate annually and more often in the final five years of work. Update balances, debt, contributions and intended retirement age. A useful target is one that changes your next decision, not a frightening number printed without assumptions.
Quick reference
Key things to remember
- Estimate housing, food, utilities, transport, health and insurance.
- Add travel, hobbies, gifts and home maintenance.
- Subtract likely Age Pension and other income.
- Allow for tax, inflation and a longer-than-expected life.
Put it into practice
Your next steps
- 01
Track real household spending for three months.
- 02
Create modest and preferred retirement budgets.
- 03
Run both through a reputable retirement planner.
- 04
Review the target after major life or market changes.
Check the source
Official information
Super and tax rules change. These primary sources are the right place to verify the details before you act.