How Much Do I Need to Retire?

Like many things in life, it depends! This article explains.

If you can live on $27,000 per year ($41,000 for couples) then you don’t really need to save anything for retirement. All you have to do is wait until you’re eligible for the Age Pension (e.g. age 67).

But if you’re used to a salary that’s a little higher than this then your lifestyle probably requires more than this. You’ll need your super and other savings to cover that.

But how much do YOU really need?

A quick snapshot of my background. I’ve been working as an actuary in retirement for nearly thirty years. I regularly help Australia’s finance industry by writing articles, papers and consultations about superannuation and retirement.

Ultimately, there is a mathematical link between the lifestyle you want in retirement and the amount of money you need saved so that you and your loved ones can be financially confident.  In this article I’ll give you the basics on how to unpak this and find your answers. Earning people’s trust is what I value most. 

  • It depends on how old you are. Retiring at age 60 requires significantly more savings than retiring at ag 70. This is because you’ll be drawing down your savings for longer. If you have a life expectancy of 90 (say) then retiring at 60 means your savings need to support you for 30 years of living costs. Whereas retiring at 70 means your savings only need to support you for 20 years.
  • It also depends on whether you have a spouse and how old they are. Most couples plan their finances together which means their savings need to last for as long as either of them could live. Also, if your spouse is younger than you then any Age Pension you’ll be entitled to gets reduced until they also reach Age Pension age.
  • It depends on what lifestyle you want. Obviously, you’ll need more saved up to cover 100% of your old salary than if you’re happy to live on 50% of your old salary in retirement. After all, you’ve hopefully paid off the mortgage and finished putting the kids through school…. But it’s up to you. If you want a better lifestyle, you’ll need more savings. You need to ‘run the numbers’ for your situation.
  • It depends how you’re impacted by Age Pension means-testing. Young Australians are often surprised to hear that most Australians get some sort of income from the Age Pension in retirement. It helps all retirees including those with a fairly high level of savings (up to $634,750 for a single homeowner or $954,000 for couples as of June 2023) or high assessable income (more than $60,268 per annum for singles or $92,144 for couples). Even if you don’t get any Age Pension when you first retire, you’ll become eligible later on in life if you spend down your super to these levels. The Age Pension income helps even wealthy Australians improve their retirement planning but to allow for it, you need rigorous financial projections of your year-by-year cashflows to map it all out. Request an example.
  • It depends where you want to live. Do you plan to stay where you are or move at some stage in the future? Perhaps you’d like to renovate or even buy a holiday home. Or perhaps you’re considering downsizing – in which case you might consider using the excess to top up your super.
  • It depends on your attitude to ‘run-out risk’. This is the chance your savings get exhausted whilst you’re still alive! That could happen if market returns are bad, or if living costs shot up and you spend your money faster than expected. Allowing for this requires robust stress testing of your situation through a full range of possible market scenarios that Australia could experience.
  • Run-out risk is also an issue if you live longer than you budgeted for. An increasing number of Australians are reaching age 100, and couples get two shots at being in the long-living group. We deal with this by looking at the probability you could live to each age.
  • To have a low risk of running out, you’ll need a larger amount of savings than if you’re happy with a 50/50 chance of running out. Our actuaries are able to quantify this for you to make informed decisions about risk.
  • You might plan to work part time for a while.  If so, the amount you need to retire could be less because the extra income reduces the speed you draw down your own savings in the early years. However, that extra income may also impact your means-testing position above…
  • It depends whether it’s important for you to leave an inheritance to your kids. If so, you will need more saved than if you’re happy to use up all your savings for your own lifestyle.

As you see, there is no “one-size-fits-all” rule-of-thumb or answer. We are all different and everyone needs their own personal calculations.

So, how do we calculate “How much do I need to retire?” 

Jubilacion’s actuaries have built one of the most sophisticated retirement calculation engines in the world (honestly). The reason we did this is because super funds just don’t provide solid answers to this type question. It’s hard.

Australia is said to have one of the most complex retirement systems in the world. With superannuation, all the investment risk and most decision making gets passed on to the individual in retirement!

A lot of people say they’d like to access a free online calculator to work this out. In the past, we did build online tools that let people tackle this type calculation for themselves for free. But people quickly realise they lose confidence with DIY calculators. They start feeling unsure if the calculator they’re using is the right one for their needs. Or they worry about whether they’ve inputted everything correctly. People often don’t fully understand what all the inputs mean or all the assumptions used. They get concerned about whether the free calculator has been maintained propertly over time. As a result, they can’t make confident decisions.

We thought hard about this and how to solve it. We realised what’s needed it to offer this as a service, where a trained professional works with you and helps you through the process; where you have someone there to answer questions and to ensure you can interpret your results correctly. It’s incredible to watch people light up as they see their numbers; to see their shoulders relax when they find out they can retire sooner than they thought; or to see them sigh but have that look of resolve when they see they have a way to go but it’s all achievable. 

We recently got a phone call from a couple we helped in South Australia who had a farm with a modest acreage. The first thing they said on the phone was, “The day after we received our report, we realised we could be confident in our retirement.  We went straight out and bought the caravan we always wanted!”

Does it cost an arm and a leg for this service?

Not really. But it involves a few hours of time.  What it’s about is building an accurate picture of your financial position and then doing year-by-year projections of your superannuation and assets, investment income, all the cashflow in my bullet points above and your spending each year.  We do this every year of the rest of your life (taking into account the probability you’re still alive in each year) and stress test it thousands of times to check you’re ok in all likely scenarios you could encounter (e.g. as markets bounce up and down). 

Then it’s a matter of working backwards. What amount of savings will deliver the lifestyle you seek, with confidence, every single year for the rest of your (and your spouse’s) lives… even if living costs go up or you live longer than average. And if you don’t like the answer, what is the impact of the decisions you can make? Ask us for examples or a free trial.

It’s only by doing this (or buying an annuity!) that you can have any meaningful conversation about how much you need to retire. 

Having someone to explain things can solve the problems you’d otherwise encounter. We have decades of experience in this field, and can deal with nearly any scenario or complexity you might be worried about.

People love working with us for a couple reasons – digesting our results is a breeze and we’re a fraction of the price of a typical financial adviser.

And yes, it’s fair to ask, “why don’t financial advisers do it for your price?” It’s because it’s our software and we are actuaries; we specialise in modelling. Incidentally, financial advisors often ask to license our software (we spent 10 years developing and building it at an eyewatering cost of over $1million). “Why do they want to licence our software?” Quite simply because it answers the three questions that no superfund or normal planning software can. We can accurately calculate what you can spend each year in retirement, and how much money you’ll need to deliver that and be confident it won’t run out. And indeed…your next response is pertinent: “But we don’t know how long we’re going to live for!” Correct. The software deals with this by considering all the ages you could live to – considering the probability you get there.

“What info is needed and how can I trust it’ll be kept private and dealt with sensitively?”

You’re not alone in feeling private. Trust and respect are at the heart of who we are, and what we stand for. Yes, the calculation involves a full snapshot of your financial position and major decisions. But it’s not about selling anything and we aren’t tied to anybody else. It’s here to help you make decisions for you and your family. You’re always in control and what you see is what you get.

We take financial services very seriously indeed. See our privacy policy below.

The information needed to calculate how much you need to retire is:

  • Details of your current savings: Super, non-super, property, cash, debts for you and your spouse;
  • Details of your salary and work plans Again, for you and your spouse including any part time work plans;
  • Your age(s), health category, planned retirement age(s);
  • Your desired lifestyle in retirement Including any ‘extras’ like home renovations, new motor-home, budget for world trips for a decade – it’s up to you!
  • Other items Like an incoming inheritance, sale of a business, desire to leave a bequest etc, etc.

The calculation needs to handle over 90 factors about your retirement projection.

“Okay, so you’ve told me you’re affordable and trustworthy. I still have reasons I wouldn’t use a service of this kind.”

Again, this is a common response. Retirement is a huge topic, that the industry offers very little support with. The super fund looking after your nest egg should be helping you – but they typically don’t.

However, this lack of existing support doesn’t mean you don’t need to do anything!  If you don’t tackle it, you face a high risk of either running out of money later in life or living too frugally and not achieving the lifestyle you’ve saved for. A lot of Australians end up working for longer than they need to because they don’t have these answers and then, when they do retire, spend too little– as a way of handling the uncertainty rather than getting support that they need and can trust.

Here are some everyday reasons for not getting in touch – identified by the regulator ASIC:

– You prefer to do everything yourself.

– You have concerns over who to trust.

– You feel it isn’t something you can afford.

– Perhaps you aren’t sure if you’re the right type client to be getting help.

– Maybe you aren’t clear about the benefits of this type service.- Or, like many pre-retirees, you simply don’t know where to start!

What we’ve noticed over the years, is that the people who are weighed down with objections, are the ones who often delay their retirement. It’s not that they are wrong, or that their reasons aren’t justified; it’s just that they need a little encouragement to trust their own gut and take that leap of faith to speak to someone. Often that first step is the hardest. But it takes you one step closer to a huge weight being lifted off your shoulders. Inaction is the real enemy.

Why not try a little exercise to demonstrate how thinking through some of the big questions could help? Grab a pen and paper and answer these questions:

  • “What’s important to you when it comes to planning retirement?”
  • “Is there anyone else whose future hinges on your financial decisions?
  • “What would give you confidence about your long-term income in retirement?”
  • “What do you look for when getting help with major financial decisions like retirement?”

Are there people like me who use this service? What sort of people know they need this?

The type of calculations we do focus on the three major questions that super funds don’t answer. It’s mainly for anyone who expects to have say, $200,000 – $1.8 million in savings (including their spouse) when they retire. But it’s really for anyone who desires a lifestyle in retirement that costs more than the Age Pension provides, or who’d like to retire earlier than when the Age Pension starts.

Even if you don’t become a client of ours – our newsletter updates get people in tune with these very questions. The feedback we’ve received, is that our newsletters have given key insights and information that helped people tackle the retirement questions that matter to them. The more you engage with these three questions, the closer you are to understanding how to design your ideal retirement.

Also, please do email or call us if you have any retirement what-ifs you’d like to ask us. We recently had Susan (not her real name) who called us in desperation after seeing one of our posts, and told us she couldn’t reach anybody at her superfund who could answer her question, so decided to call us instead.

We have many reviews and stories which you can access here.  We also have a range of client case studies. Don’t forget to look at our Google reviews too!

“Jim made it very easy for us. He listened carefully to what we wanted from Jubilacion and was able to answer our questions effectively and efficiently, both by email but also via our face-to-face conversations.

Jubilacion offers a service that many people require but do not know how to articulate or where to obtain this information. It is a great tool for pre-retirees who do not require the whole gamut of information rovided by Financial Advisers but just want to ensure that they are on the right path in terms of living a comfortable retired life.

“If more people knew about Jubilacion’s services, they might not need to go to expensive advisors who often provide more information about investments and less information on how your money can work for you in your retirement.”

“How will Jubilacion’s email updates help?”

Hopefully we have given you lots to ponder. Remember we focus on the three big questions the super funds don’t (and can’t). Every month you’ll receive updates on –

  • the three big questions that unlock the key to a great retirement 
  • how your year-by-year cashflow model will tell you How Much You Need to Retire for your unique situation?
  • case studies and What If… situations
  • superannuation news and policies (we help decode the policies that could impact Australian retirement pots) 
  • Best Retirement Tips & Checklists

The reason we built Jubilacion is because the industry has muddied the waters for people in a sector that was already convoluted and complex – we want to support and simplify an already tricky time of life. People who use us, love what we do, but not everyone could take that that leap of faith. Today, I urge you to act – whether you call us, join our newsletter updates, or simply write down what you want in your retirement. Good luck! If you’re in the frame of mind to chat through how it all works in your situation, without obligation or pressure, drop us an email or get in touch.

Happy calculating.

Jim Hennington BCom FIAA DipFP

CEO / Consulting Actuary

To read more articles on ‘Modern Retirement Modelling’, and watch a video of it working in practice, visit this page on

Jim Hennington - Jubilacion

Jim is a Fellow of the Institute of Actuaries who has spent his career specialising in scaled advice. Jim previously founded a boutique ex-pat retirement planning practice which grew to become an international network (UK, Canada, Australia and New Zealand). Since 2010 he has held senior software development roles for a number of financial institutions in Australia and the UK including the design of retirement decision systems for HSBC, Challenger Life and Scottish Widows. As well as being a Fellow of the Institute of Actuaries, Jim holds a Commerce degree from the University of Melbourne as well as two Diplomas in Financial Planning (UK and Australia).