Most Australians approaching retirement ask the same question in different words: how much can I live on? ASIC’s MoneySmart retirement planner is a useful starting point for today’s entitlements. What it does not show is how your income might change over 25–30 years as super falls, deeming shifts, and part-pensions appear — or whether your spending would have survived real historical crashes.
Three income layers
1. Age Pension (if eligible) — tested on assets and income, often rising as super draws down.
2. Super drawdown — account-based pension, subject to minimum drawdown rates by age.
3. Other assets or work — part-time income, rental property, cash outside super.
Planning tools that ignore the interaction between layers 1 and 2 can overstate or understate what is sustainable.
Example mindset: A couple with $600,000 in super at 67 might target $70,000 a year total household spending. Early years might be mostly super; later years might include a growing part-pension. The order of investment returns matters as much as the average.
Why “4%” or “$X per year” is incomplete
Rules of thumb do not know your fees, asset mix, partner’s age, or whether you are a homeowner. They also treat returns as smooth. Australian retirees face sequence-of-returns risk: a downturn in the first five years of drawdowns does more damage than the same downturn later. Our guides on sequence risk and safe withdrawal rates go deeper.
What to model before you decide
- Spending in today’s dollars (essential vs discretionary)
- Whether you need income to last to 90, 95, or beyond for a couple
- Age Pension under assets and income tests each year
- Stress against real historical periods (1928 onward), not only average returns
Worked example: single at 67 with $500,000 super
Suppose you are a homeowner, single, with $500,000 in super at 67 and target spending of $55,000 per year in today's dollars. In year one you might draw heavily from super because the Age Pension is not yet maximised under the assets test. As super falls over time, the pension can rise — but only if your assessable assets stay within thresholds. A bad return sequence in the first five years can permanently lower what is sustainable even if long-run averages look fine.
Couples: why household modelling matters
Couples are not two singles added together. Age Pension is assessed on combined assets and income. If one partner is still working, super contributions and tax can continue. If partners retire at different ages, income can move through three distinct phases before both are on full super drawdown and pension. See phased retirement calculator for couples (2026) and one partner retired, one still working, then run the household plan in the Advanced Calculator.
Minimum drawdowns and mandatory income
Once you start an account-based pension, Australian law requires minimum annual withdrawals (for example 5% at 65, rising with age). In strong market years those minimums can exceed the lifestyle income you actually need. That changes the shape of your income over time and should be part of any realistic plan.
Stress-test before you commit to a spending number
Before locking in a retirement budget, test whether that spending would have survived retiring just before major historical shocks. The Advanced calculator replays real historical sequences and shows worst, median, and best outcomes with Age Pension rules applied each year.
Next step: Use the retirement income needs calculator to estimate a target budget, then open the Advanced Australian retirement calculator to test sustainability across 35 years of real market history.
Run your retirement income scenario
Start with the Basic calculator for a first sustainable-income estimate, then open Advanced to see historical worst, median, and best outcomes with Age Pension rules applied year by year.
Run the Basic Retirement Calculator Stress-test in the Advanced Retirement Calculator