Modest retirement covers basic activities with limited discretionary spending. Think basic transport, limited holidays (mainly domestic), and occasional leisure activities.

How Much Super Do You Need? The Numbers

Result: David maintains a modest lifestyle. His near-full pension provides a secure base, with super providing extra comfort.

Factors That Affect Your Super Needs

1. Life Expectancy

Australians are living longer. Current life expectancy at age 67 is:

• Males: 85 years (18 years in retirement)
• Females: 88 years (21 years in retirement)

Planning to age 90-95 is prudent, especially if you have good health and longevity in your family.

2. Investment Returns in Retirement

Your super doesn't stop growing when you retire. Common retirement investment strategies return:

• Conservative (70% bonds, 30% shares): 4-5% p.a. after fees
• Balanced (50/50 bonds/shares): 5-6% p.a. after fees
• Growth (70% shares, 30% bonds): 6-7% p.a. after fees

Higher returns allow your super to last longer, but come with higher volatility and risk.

3. Inflation

Inflation erodes purchasing power over time. At 3% inflation, $50,000 today will need to be $67,000 in 10 years to maintain the same lifestyle. The Age Pension is indexed to inflation, providing some protection.

4. Healthcare Costs

Healthcare expenses typically increase in later retirement (ages 75+). Budget an additional $5,000-$10,000/year for health insurance, medications, and dental/optical care.

5. Unexpected Expenses

Major home repairs, car replacement, or helping adult children can impact retirement plans. A buffer of 10-15% above your desired income is wise.

If you have a large SMSF, the Transfer Balance Cap ($2.0M in 2025-26) limits how much you can transfer to pension phase. Excess amounts remain in accumulation phase and are taxed at 15%.

How to Think About Your Personal Retirement Needs

Rather than relying only on generic figures or rules of thumb, many people find it useful to think about their own retirement needs in terms of:

1. Your desired annual income - Looking at current spending and how it might change in retirement (for example, fewer work costs but more leisure)
2. Your current super balance - Using your latest statement as a starting point
3. Years until retirement - How long you expect to keep contributing
4. Expected investment returns - Both before and during retirement, noting that these are always uncertain
5. Age Pension eligibility - Considering how the asset and income tests might apply to you
6. Other assets and income - Such as rental properties, part-time work, annuities or other investments

Next Steps

Now that you understand how much super you might need, here are your next actions:

1. Calculate your retirement goal - Use our calculator to model your specific situation
2. Check your current super balance - Log into your super fund to see where you stand
3. Increase contributions if needed - Salary sacrifice or after-tax contributions can boost your balance
4. Review your investment strategy - Ensure your super is invested appropriately for your time horizon
5. Consider professional advice - A licensed financial adviser can provide personalized strategies

📚 Cornerstone Guide

📖 How Much Super Do I Need to Retire?, Full guide (ASFA standards, Age Pension, scenarios, calculator)

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More articles on contribution limits, drawdown strategies, and transition to retirement coming soon.