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This is the question most Australians eventually get around to asking — usually somewhere between their late forties and a mild existential crisis. The good news is that there's a reasonably clear framework for answering it. The less good news is that the answer is almost certainly higher than the figure currently sitting in your super statement.
Understanding why — and what to do about it — is what this guide is for. The ASFA benchmark: a useful starting point, not a final answer The Association of Superannuation Funds of Australia (ASFA) publishes a Retirement Standard each quarter that estimates what Australians actually need to fund different retirement lifestyles. The figures for 2024–25 look like this: For a comfortable retirement, ASFA estimates couples need approximately $690,000 in superannuation savings, with annual spending of around $72,000. For singles, the figure is approximately $595,000, with annual spending of around $51,000. A comfortable retirement, in ASFA's definition, covers private health insurance, a reasonable car, domestic and some overseas travel, good food, and leisure activities. It's not extravagant. It's a decent standard of living without constant financial anxiety. A modest retirement sits considerably lower — around $100,000 in savings for both singles and couples — but that scenario relies heavily on the age pension to fund most of the annual spend. It's a liveable outcome, but a constrained one. These benchmarks are a sensible place to start. They're based on real spending data, updated regularly for inflation, and widely used by financial planners across Australia. The problem is treating them as the number, rather than a reference point that needs to be adjusted for your actual life. Why "comfortable" in Sydney costs more than the national average suggests ASFA's figures are national averages. They don't fully account for the cost of living in Sydney, which is meaningfully higher than the national median — particularly for housing, healthcare, and transport. If you're renting in retirement, the ASFA comfortable retirement figure becomes substantially insufficient. The standard assumes home ownership, meaning accommodation costs are relatively low beyond rates and maintenance. A renter in Sydney's inner suburbs spending $600 to $700 per week on housing is drawing down on capital at a rate that most retirement portfolios can't sustain comfortably for thirty years. This is one of the more underappreciated risks in retirement planning for Australians who don't own property. The age pension's rent assistance supplement helps, but it's not close to covering market rents in Sydney. If your retirement plan includes renting, your savings target needs to reflect that reality explicitly. Working backwards from what you actually want Rather than accepting a benchmark figure, a more useful exercise is to start with what you want retirement to look like and work backwards from there. Take an honest estimate of your annual expenses in retirement. Don't use current expenses as a proxy — housing costs often drop for homeowners, work-related spending disappears, and children are (usually) financially independent. But healthcare tends to increase, leisure spending often rises in the early years of retirement when you're still active, and any travel aspirations need to be costed. Once you have an annual figure, the calculation is fairly straightforward. The age pension (currently around $28,500 annually for singles and approximately $43,000 for couples who qualify for the full rate) offsets some of that spending. The remaining gap needs to come from your super and any other investments. If you're planning to retire at 65, and you have a reasonable life expectancy — the ABS currently estimates average life expectancy at around 85 for women and 81 for men — you're potentially funding 20 to 25 years of retirement income. That's a long time. It's long enough for inflation to erode purchasing power significantly, for healthcare costs to escalate, and for investment returns to go through multiple cycles. The 4% annual drawdown rule is sometimes cited as a general guide — meaning a retiree can sustainably draw 4% of their portfolio per year without depleting it over a 25-30 year horizon. On a $690,000 portfolio, that's around $27,600 per year from super alone. Combined with the age pension for those who qualify, the numbers work. For those who don't qualify — either because of assets or income — the portfolio needs to work harder. The gap between where most Australians are and where they need to be APRA's data on superannuation balances tells an uncomfortable story. The median super balance for Australians aged 55 to 64 — the decade immediately before retirement — sits well below the ASFA comfortable retirement benchmarks for both men and women. The gap is particularly pronounced for women, reflecting lower average incomes, more career interruptions, and historically lower super contribution rates. This matters because the fifties are the final window for meaningful catch-up. After that, there's limited time for compounding to do its work, and the only lever left is the balance you retire with. The carry-forward concessional contribution rules — which allow Australians with super balances below $500,000 to use unused contribution cap amounts from the previous five years — exist precisely to address this. If you're in your fifties and your balance is behind where it should be, this is one of the most tax-effective mechanisms available. If you haven't reviewed your retirement trajectory with a professional, Retirement Planning Sydney is where Davlin Wealth Management does exactly this work — building a clear picture of where you are, what the gap looks like, and what strategies will close it most effectively for your specific circumstances. The factors that change your number No single figure works for everyone, and several variables shift your personal target significantly. Home ownership is the biggest one. Owning your home outright at retirement removes a major expense from the annual budget and also affects your age pension assets test calculation — the family home is exempt from the assets test, which means homeowners can hold more in super and investments while still accessing a full or part pension. Your health matters more than most people build into their projections. Australians who retire in good health and remain active often spend more in the first decade of retirement than in later years. Healthcare and aged care costs tend to rise significantly from the mid-seventies onward. Building a buffer for potential aged care needs — whether that's in-home support or residential care — is something that gets overlooked in retirement planning conversations far too often. Whether you're retiring as part of a couple changes the picture in both directions. Two people share fixed costs more efficiently than one, which is why the ASFA couple figure isn't simply double the single figure. But losing a partner mid-retirement also has significant financial consequences if income streams — including super pensions — aren't structured to account for it. Lifestyle expectations are the most personal variable of all. A retirement spent largely in Australia, in a paid-off home, with modest travel, is a fundamentally different financial proposition to one that involves extended overseas travel, private school fees for grandchildren, or significant gifts to adult children. Neither is wrong — but the target needs to match the plan. A number isn't a plan Knowing your retirement savings target is the beginning, not the end. The more useful question is whether your current contributions, investment strategy, and super fund are structured to reach that target — and what adjustments will close the gap if they're not. That's not a question most people can answer confidently without modelling it properly. The variables are too interconnected — super balance, contributions, investment returns, the age pension means test, potential property equity, and the timeline itself all interact in ways that make back-of-envelope estimates unreliable. Start by knowing your number. Then make sure you have a plan that actually reaches it. Comments are closed.
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