What retirement income do I need in Australia?”, you’re not alone.
It’s one of the most common and most important financial questions Australians ask as they plan for the future. After all, retirement isn’t just about stopping work; it’s about maintaining the lifestyle you’ve built, covering your costs comfortably, and enjoying your freedom without worrying about money.
In this guide, we’ll break down how to calculate what retirement income you need, what the averages look like in Australia, and how to plan for a lifestyle that suits you.
Understanding What Retirement Income You Need
Your retirement income is the amount of money you’ll need each year (or month) to fund your lifestyle after you stop working.
It covers:
- Essentials like housing, food, and utilities
- Health expenses, insurance, and transport
- Lifestyle choices such as travel, hobbies, and dining out
The right amount depends on your personal circumstances but research from the Association of Superannuation Funds of Australia (ASFA) gives us reliable benchmarks.
What Retirement Income You Need for a Comfortable Lifestyle
According to the ASFA Retirement Standard (June 2025), here’s what retirement income looks like for Australians aged around 65 who own their home outright:
| Lifestyle | Single (Annual) | Couple (Annual) | Monthly Estimate (Couple) |
|---|---|---|---|
| Comfortable | ~$53,289 | ~$72,148 | ~$6,010/month |
| Modest | ~$34,000 | ~$49,000 | ~$4,080/month |
So, if you’re wondering “what retirement income do I need?” a good starting point is around $4,000–$6,000 per month, depending on your lifestyle goals.
What’s the Difference Between “Comfortable” and “Modest” Retirement?
A comfortable retirement lets you enjoy a few luxuries like travelling overseas every couple of years, eating out, and maintaining private health insurance.A modest retirement covers the basics food, utilities, and simple leisure activities but doesn’t allow for big discretionary spending.
ASFA’s data assumes retirees live independently, own their home, and remain healthy. If you’re renting or have higher medical costs, you’ll likely need more.
How to Estimate What Retirement Income You Need
Everyone’s idea of a “good” retirement is different.
For some, it’s about freedom and travel for others, it’s security, simplicity, and family time.
That’s why your retirement income shouldn’t be based on averages alone it should reflect your real lifestyle goals.
Here’s how to work out what retirement income you need:
1️⃣ List Your Essential Expenses
Start with the basics the things you’ll always need to pay for, regardless of lifestyle:
- Housing costs: Rates, maintenance, insurance, or rent (if applicable)
- Utilities: Electricity, gas, water, and internet
- Groceries: Food, household supplies, and toiletries
- Healthcare: Private health insurance, medical appointments, and prescriptions
- Transport: Fuel, public transport, or vehicle costs
Example: If your essentials cost $3,500 per month now, you may still need around that amount in retirement (minus commuting and work-related expenses).
2️⃣ Add Lifestyle Spending
Next, think about how you want to enjoy your retirement.
This is where your quality of life takes shape.
Include:
- Travel: Domestic or overseas holidays, road trips, or visiting family
- Hobbies: Golf, gardening, memberships, art classes, etc.
- Dining & entertainment: Eating out, social events, movies, concerts
- Gifts & family: Helping children or grandchildren financially
- Fitness & wellness: Gym, yoga, or health programs
Example: If you travel overseas once a year, add about $10,000–$12,000 annually (roughly $900–$1,000/month) to your income target.
3️⃣ Account for Inflation
Living costs rise every year and even a 2–3% annual increase compounds over time.
If your monthly retirement expenses total $5,000 today, you may need around $6,500–$7,000 per month in 10–12 years just to maintain the same standard of living.
Tip: Choose investments that grow with inflation, like diversified super funds or dividend-paying shares, so your income can keep pace with rising costs.
4️⃣ Subtract Any Debt
Ideally, you’ll retire debt-free but if you have remaining obligations, you’ll need to budget for them.
This may include:
- A small mortgage or line of credit
- Car or personal loans
- Credit card repayments
Example: A $1,200 monthly mortgage repayment could add nearly $15,000 per year to your required income so paying down debt before retirement is one of the best investments you can make.
5️⃣ Use the 70% Rule
A general rule of thumb is that you’ll need about 70% of your pre-retirement income to maintain a similar lifestyle in retirement.So if you earned $100,000 a year before retiring, you’ll likely need about $70,000 per year or roughly $5,800 per month in retirement income.
This rule assumes you’ll spend less on work-related costs (like transport or clothing), but more on health and leisure.
How Much Super You’ll Need for That Income
To generate that retirement income, you’ll need a super balance that supports steady withdrawals.
According to ASFA (2025):
- Singles need about $595,000
- Couples need around $690,000
These amounts assume you draw some Age Pension and own your home.
If you want more flexibility like frequent travel, higher medical cover, or helping family aim for $800,000+ in super.
Looking to learn more about planning your retirement income?
Check out:
- What Is a Good Monthly Retirement Income – Learn what Australians actually live on each month after work.
- How Much Money Do Most People Retire With – See where you stand and how to build a stronger nest egg.
These blogs work hand-in-hand to help you understand your numbers, goals, and the steps to secure your financial future.
Where Your Retirement Income Comes From
Your total retirement income typically comes from a few key sources:
- Superannuation (Account-Based Pension):
The main source of income for most Australians, offering flexible and tax-free withdrawals after 60. - Age Pension:
The government safety net around $1,116 per fortnight for singles and $1,682 for couples (combined). - Investments:
Property, shares, or term deposits can top up your income and hedge against inflation. - Savings or Part-Time Work:
Many retirees choose to work casually or draw from savings for special expenses.
How to Make Sure Your Income Lasts
Knowing what retirement income you need is just the first step.
The real challenge is ensuring your money lasts as long as you do especially since many Australians now live well into their 80s or 90s.
Here are a few strategies to make your retirement income sustainable:
✅ Start an Account-Based Pension
Convert your superannuation into an account-based pension when you retire.
This allows you to draw a regular income while your remaining balance continues to grow through investments.
Benefits include:
- Tax-free earnings and withdrawals after age 60
- Flexibility in adjusting payment amounts
- Investment growth to offset inflation
✅ Diversify Your Investments
A mix of growth assets (like shares and property) and defensive assets (like bonds and cash) can help balance risk and return.
- Growth assets keep your money growing over the long term.
- Defensive assets protect your capital during market downturns.
Example: A balanced portfolio (60% growth, 40% defensive) can provide stability while generating the returns you need to sustain your lifestyle.
✅ Review Withdrawals Regularly
A popular approach is the “4% rule” withdrawing about 4% of your total savings each year.
For example:
If you retire with $700,000 in super, withdrawing 4% ($28,000 per year or ~$2,300 per month) helps your money last roughly 25–30 years, assuming moderate investment returns.
Regular reviews help you adjust withdrawals as markets, inflation, or your needs change.
✅ Plan for Healthcare Costs
Healthcare becomes a bigger part of retirement spending over time.
Plan ahead by:
- Maintaining private health insurance
- Keeping an emergency fund for out-of-pocket expenses
- Considering long-term care insurance or a medical buffer
Even an extra $200–$300/month set aside for future health costs can protect your budget later.
✅ Revisit Your Plan Yearly
Your retirement plan shouldn’t be “set and forget.”
Review it every year to:
- Adjust for inflation and new expenses
- Rebalance investments
- Account for any lifestyle changes
- Reassess your Age Pension eligibility or tax situation
A yearly check-up ensures your income continues to support your goals not limit them.
FAQs:
1. What retirement income do I need for a comfortable lifestyle in Australia?
According to ASFA’s 2025 Retirement Standard, singles need around $4,400 per month, while couples need about $6,000 per month for a comfortable lifestyle that includes travel, dining out, and quality healthcare.
2. What retirement income do I need if I rent?
Renters should budget an extra $1,000–$2,000 per month, depending on location and housing type. Renting in Sydney or Melbourne can significantly increase monthly costs compared to regional areas.
3. What retirement income do I need to travel regularly?
If you plan to travel annually, add $10,000–$15,000 per year (or about $900–$1,200/month) to your income target. This covers airfares, accommodation, and insurance.
4. What retirement income do I need if I retire early?
If you retire before age 60, you’ll need a higher balance to cover extra years before accessing your super or Age Pension.
Plan for at least 25–30 years of income, not the traditional 20.
5. What retirement income do I need for a modest lifestyle?
A modest lifestyle means covering essentials like food, utilities, and basic leisure.
Singles need around $2,800/month, while couples need about $4,000/month, according to ASFA’s 2025 figures.less need around $4,000/month for essentials.
Planning the Retirement Income You Really Need
So, what retirement income do I need?
For most Australians, a comfortable lifestyle means around $4,000–$6,000 per month depending on your housing, health, and lifestyle goals.The key is to plan early, invest wisely, and review regularly so your income keeps up with your dreams not just your bills.
At Wealthlab, we help Australians design retirement income strategies that blend super, investments, and pension options all tailored to your goals.
👉 Book a consultation today to find out how much retirement income you’ll need and how to make it last.
Learn More About Retirement & Superannuation
https://www.servicesaustralia.gov.au/how-much-age-pension-you-can-get?
https://www.statesuper.nsw.gov.au/sass/benefits/preservation-rules?