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.
Worked couple example (engine, not a rule of thumb): Homeowners, both 67, combined $600,000 in super, 30-year horizon, Age Pension on, balanced-ish allocation (35% US shares, 15% Aussie, 20% international, 20% bonds, 10% cash). Across rolling historical start years the Maximum Sustainable Income (MSI) for a 1980 start is about $85,078 a year in today’s dollars. A $70,000 spending target cleared that MSI bar in 90% of rolling periods (62 of 69). That is the opposite of a soft “might target $70k” guess: same household, same rules, measured against real market history.
Why “4%” or “$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 vs $800,000
Same engine settings as above, single homeowner, age 67, 30-year horizon. With $500,000 in super, MSI for a 1980 start is about $60,278 a year. Targeting $45,000 cleared the bar in 100% of rolling periods (69 of 69). Targeting $55,000 cleared it in only 67% (46 of 69) — same person, same balance, different spending ask.
Lift the starting balance to $800,000 and MSI rises to about $69,316. The same $55,000 target then clears in 97% of rolling periods (67 of 69). That gap — roughly nine percentage points of historical hit rate for the same lifestyle — is what a one-line “4% of balance” rule never shows, because it ignores Age Pension taper, minimum drawdowns, and the order of returns.
Run your own balances in the Advanced Calculator; allocation, other assets, and partner timing will move these figures.
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