How much do I need to retire?

There is no one magic number that everyone needs to retire.  A general rule of thumb that Andep adopts for entirely self funded retirement preparedness is that if our clients can live off the equivalent minimum pension proportion of the balance they have in their superannuation balance then they are in a good position for a comfortable retirement. 

Age based minimum pension proportions apply once you commences a pension from superannuation.  Under 65 this is 4% of one’s pension balance at the start of the financial year, it increases to 5% between 65 and 74 and further still with age.  There is no maximum drawing each year but it is generally prudent to draw as close to the minimum as your expenses allow in order to retain the maximum amount of money in the tax free pension environment for as long as possible.  You can also withdraw ad-hoc lump sums in addition to pension payments if ever needed but of course you will need to be careful that these will not undermine your retirement .

On a pension application form with a public offer superannuation fund one will be asked if one wishes to receive the minimum pension or a higher nominated amount.  The minimum is then recalculated by the fund each year. 

This general rule of being able to live off the minimum pension proportion can change though depending on the age at retirement, life expectancy and large expected expenses in retirement etc. 

A worked example of the minimum pension rule:

A 61 year old couple are looking to retire and believe they spend a combined $110,000 per annum.  The minimum pension proportion at that age is 4% of their superannuation balances so they would need $2.75 million in superannuation in order to live off of only their minimum pension payments. 

Superannuation is usually considered the most tax effective place to save and invest for retirement.  This is because contributions to superannuation are concessionally taxed (usually at 15%) as are any investment earnings made by the fund.  Then in retirement, earnings on the first $2.0 million (as at 1 July 2025) per person in superannuation are tax free once one commences a pension. 

The Association of Superannuation Funds of Australia (ASFA) publishes a retirement standard every quarter.  That standard (as at June 2025) says that for couples who own their home outright to live a “comfortable” retirement at age 67 require $75,319 per annum or $49,992 per annum for a “modest” retirement.  Couples should aim to have at least $690,000 in superannuation at age 67 to support a comfortable retirement.  For a single person who owns their home outright to live a “comfortable” retirement at age 67 the standard says they require $53,289 per annum or $34,522 per annum for a “modest” retirement.  Singles should aim to have at least $595,000 in superannuation at age 67 to support a comfortable retirement.  However, everyone’s definition of comfortable or modest will be different and the ASFA website provides a breakdown of the respective retirement budgets.  The ASFA figures allow for individuals to get a part government Age Pension but this is not payable until age 67, therefore if one would like to retire earlier or believes they will spend more than these figures each year then one requires a greater level of assets to support this. 

The Australian government Age Pension is available from age 67 and is both income and asset tested and one receives the lower pension amount as calculated by these two tests.  Generally, if one is not working or receiving income from another source like an overseas pension then at age 67 the harsher of the two tests will be the assets test.  The September 2025 Age Pension rates are $1,178.70 per fortnight for a single person (~$30,646 per annum) and $888.50 each for couples (~$46,202 per annum combined). These rates are updated every March and September.  Home owning couples must have less than $481,500 in assets to be eligible for the full rate of Age Pension.  Home owning singles must have less than $321,500.  The pension will reduce by $3/fortnight for every $1,000 in assets over these thresholds.

It is worth noting that the Age Pension alone is less than the figures published by ASFA that are needed to fund a “modest” retirement and much less than those needed for a “comfortable” retirement.  Having funds in superannuation in retirement can help to secure a better standard of living.