How long your retirement savings last depends on four things: how much you have, how much you spend each year, what your investments return, and how inflation eats into your purchasing power over time. In 2026, that last factor matters more than it has in years. The cost of living crisis that Australians have lived through since 2022 has permanently reset what retirement costs. Prices are higher, they are not going back down, and any retirement plan built on pre-2022 spending assumptions is worth revisiting.
This guide gives you the framework and real numbers to estimate how long your savings will last, with an honest account of what rising costs mean for your plan.
The Cost of Living Crisis and What It Means for Retirement Savings
The cost of living crisis is not just a short-term squeeze for working Australians. For retirees and people approaching retirement, it changes the fundamental maths.
Between 2022 and 2024, Australian household costs rose sharply across food, energy, insurance and housing. The ABS Consumer Price Index peaked at 7.8% annual growth in late 2022 and while headline inflation has moderated, many categories that affect retirees most directly remain elevated above their pre-pandemic levels. Council rates, private health insurance, energy bills, healthcare gap fees and building maintenance costs have all increased significantly and most have not reversed.
What this means for retirement savings longevity in practical terms:
A retirement budget of $45,000 per year that felt comfortable in 2020 now requires approximately $53,000 to $55,000 to buy the same basket of goods and services. That is a 20% increase in the spending required for the same lifestyle. Anyone who built their retirement income plan on pre-2022 cost assumptions, and has not revisited it, may be drawing down faster than they realise.
The inflation factor that matters most for retirement is not the headline CPI rate. It is the cost of the specific things retirees actually spend money on: healthcare, energy, insurance, council rates and food. These categories have historically increased faster than general inflation, a pattern that continued through the 2022 to 2024 period and has not fully reversed.
Scott and Phil covered the real-world impact of market volatility and cost pressures on retirement portfolios in Episode 11 of the Wealthlab Podcast. Watch Episode 11 on YouTube.
How Long Will $500K Last in Retirement?
The table below uses 5% nominal return (gross investment return in an account-based pension) and a 3.5% annual spending increase to reflect realistic ongoing cost of living pressure. This is more conservative than the “4% real return” assumption commonly used, and more realistic for 2026.
| Annual spending at retirement | Balance at 67 (est.) | Age Pension from 67 | Age savings run to (est.) |
|---|---|---|---|
| $35,000 | ~$320,000 | Near full | Late 80s to early 90s |
| $42,000 | ~$270,000 | Near full | Mid to late 80s |
| $50,000 | ~$200,000 | Part pension | Early to mid 80s |
| $60,000 | ~$110,000 | Part pension | Late 70s to early 80s |
Assumes single homeowner retiring at 60 with $500,000, 5% net return inside account-based pension, 3.5% annual spending increase. Figures are approximate and for illustrative purposes only. Individual outcomes will vary significantly based on actual spending, investment returns, fees and personal circumstances. This is general information, not personal advice.
The Age Pension extends these projections significantly. Once your balance draws down below the full pension threshold of approximately $321,500 for a single homeowner (May 2026), near-full pension entitlements of $31,223 per year arrive. This natural income floor is why most Australians who retire with modest super balances are not left destitute. The system is designed around this combination.
How Long Will $800K Last in Retirement?
A larger balance gives more flexibility but rising costs affect higher spenders proportionally more.
| Annual spending at retirement | Balance at 67 (est.) | Age Pension from 67 | Age savings run to (est.) |
|---|---|---|---|
| $45,000 | ~$640,000 | Part pension initially | Late 80s to early 90s |
| $55,000 | ~$560,000 | Part pension initially | Mid to late 80s |
| $65,000 | ~$430,000 | Part pension initially | Mid 80s |
| $80,000 | ~$240,000 | Near full by mid 70s | Early to mid 80s |
Same assumptions as above. Figures are approximate and illustrative only.
At $800,000 with moderate spending, the balance comfortably sustains a good lifestyle into the late 80s, with partial Age Pension supplementing from 67 and growing toward full pension as the balance draws down through the 70s and 80s.the portfolio life materially beyond the uninflected 23-year estimate.
The Four Factors That Determine How Long Your Savings Last
Starting balance. The larger your super and other savings at retirement, the longer and more comfortably they can sustain you. An extra $100,000 at retirement, all else equal, typically adds two to four years to savings longevity.
Annual spending and cost of living. This is the most powerful lever. The difference between spending $40,000 a year and $55,000 a year from the same $600,000 balance can be 10 or more years in savings longevity. Cost of living pressures that have emerged since 2022 have effectively shortened projected savings longevity for many retirees without them changing their spending habits at all.
Investment returns. Keeping savings invested in a balanced or growth option inside an account-based pension generates ongoing returns that partially offset drawdowns. The difference between earning 5% per year and sitting in cash at 2% on a $600,000 balance is approximately $18,000 per year in additional returns. Over 20 years, that compounding difference is enormous.
Inflation. Even moderate inflation of 3% per year reduces purchasing power by roughly half over 25 years. A retirement plan that does not build in annual spending increases will run tight in the 70s and 80s when healthcare costs also tend to rise sharply. Building a 3% to 3.5% annual cost increase into all retirement projections is a more realistic assumption in the current environment.
What the Cost of Living Crisis Means If You Are Still Planning Retirement
For Australians in their late 50s who have not yet retired, the cost of living crisis has two implications.
First, your spending in retirement will be higher than historical benchmarks suggest. The ASFA comfortable retirement standard of $54,240 per year for a single homeowner (February 2026) was updated after the inflation surge. Plans built on older, lower ASFA figures should be revisited.
Second, the gap between what you need and what the Age Pension provides has widened. At $31,223 per year, the full single Age Pension covers a smaller proportion of a comfortable retirement budget today than it did in 2020. The amount of super you need to bridge that gap has increased accordingly.
If you are still working, the most effective response to rising retirement costs is straightforward: maximise concessional contributions while you can, review your investment option to ensure you are not sitting in an unnecessarily conservative option that trails inflation, and use the free Wealthlab super calculator to model your revised retirement projections with current cost assumptions.
How the Age Pension Extends Your Savings
Current Age Pension rates as at March 2026 (Services Australia):
- Single (including supplements): approximately $31,223 per year ($1,200.90 per fortnight)
- Couple combined: approximately $47,070 per year ($1,810.40 per fortnight)
Updated each March and September.
The Age Pension acts as a natural income floor in retirement. As your super balance draws down over time and falls below the means test thresholds, pension entitlements gradually increase. This means most Australians never truly run out of income, even when their super is fully depleted, as long as they are homeowners who meet residency requirements.
The more important planning question is not whether you will have income, but whether you will have enough income at the lifestyle level you want. That is determined by the interaction of your super drawdown, investment returns, and when the Age Pension kicks in at various entitlement levels.
Phil and Dan covered how the assets test taper works across different balance levels, and when full pension arrives for different retirees, with real case studies in Episode 10 of the Wealthlab Podcast. Watch Episode 10 on YouTube.
How to Calculate How Long Your Retirement Savings Will Last
Step 1: Total your retirement savings. Add your super balance, any other investments and accessible savings. For most Australians, super is the dominant figure.
Step 2: Estimate your annual spending. Be honest and build in 3% to 3.5% annual increases to reflect ongoing cost of living pressure. Include healthcare, insurance, home maintenance and travel, not just day-to-day essentials.
Step 3: Estimate investment returns. A balanced investment option inside an account-based pension typically returns 5% to 7% per year over rolling 10-year periods. A conservative option returns 2% to 4%. The gap between these choices has a very large impact on longevity.
Step 4: Factor in Age Pension. From 67, the Age Pension begins supplementing income. At what level it arrives depends on your balance at 67. The lower your balance, the higher the pension.
Step 5: Use the Wealthlab super calculator. The free Wealthlab super calculator takes your specific balance, spending and timeline and gives you a projection in two minutes. More useful than any general table.
What Happens When Savings Run Out
For homeowners who have been drawing down super through retirement, once the balance reaches zero the full Age Pension of approximately $31,223 per year for a single person is available (assuming assets and income are below the thresholds). This is not a comfortable income, but it is not nothing. For most homeowners without debt, it covers essential living costs.
This is why owning your home outright is the single most important retirement asset outside of super. Without housing costs, the Age Pension goes a long way further.
For those approaching retirement who are still renting or carrying a mortgage, the longevity projections are materially worse and the planning required is correspondingly more urgent.
FAQ: How Long Will My Retirement Savings Last?
How long does the average Australian’s retirement savings last? It varies enormously based on balance, spending and investment returns. Most Australians who retire with $400,000 to $600,000 in super find their savings last into their mid to late 80s when combined with Age Pension support from 67. Higher balances and lower spending extend this significantly.
How does the cost of living crisis affect retirement savings longevity? Directly and meaningfully. Rising prices since 2022 mean a given retirement budget now buys less than the same dollar amount did in 2020. Retirees spending the same nominal amount are effectively experiencing a lifestyle reduction. Building in 3% to 3.5% annual spending increases is more realistic than assuming flat costs, and it significantly affects how long savings last.
What is the 4% rule and does it still apply in Australia? The 4% rule suggests withdrawing 4% of your starting balance per year will sustain savings for approximately 25 years. It was developed for US portfolios and does not account for the Age Pension, which is a significant additional income source for most Australians. For Australian retirees, the interaction with the Age Pension means many people can draw more aggressively in early retirement knowing pension support increases as the balance draws down. The 4% rule is a reasonable starting reference, not a precise prescription.
How much do I need to retire comfortably in Australia? ASFA’s February 2026 comfortable standard is $54,240 per year for a single homeowner and $77,375 for a couple. To fund that from age 60 with a seven-year gap before the Age Pension starts, a single homeowner needs approximately $580,000 to $700,000 in super at retirement. For couples, more.
How long will $300,000 last in retirement? For a single homeowner spending around $28,000 to $30,000 per year, $300,000 in an account-based pension at 5% net return lasts approximately 12 to 14 years before drawing down significantly. With near-full Age Pension supplementing from 67, combined income continues well into the 80s. For more detail see our post on retiring at 65 with $300K.
Does inflation affect retirement savings? Yes, significantly. At 3% per year, $50,000 today has the purchasing power of approximately $30,000 in 20 years. A retirement plan that does not build in annual spending increases will run short of the lifestyle it was designed to fund. Using nominal spending projections with annual increases, rather than real return assumptions, gives a clearer picture of actual account balances over time.
What is the best way to make retirement savings last longer? Keeping savings invested with meaningful growth exposure through an account-based pension, drawing only what you need rather than taking large early lump sums, and applying for the Age Pension at the right time (up to 13 weeks before turning 67) are the three most consistently impactful decisions. Investment option choice, particularly avoiding an overly conservative allocation early in retirement, often makes a larger difference to longevity than any other single factor.
What to Do Next
If rising costs have changed what your retirement needs to fund, the most useful step is to revisit your projections with current spending assumptions and current Age Pension rates, not figures from two or three years ago.
Take the free Wealthlab retirement quiz for a general read on where your retirement stands. Or book a free, no-pressure chat with the Wealthlab team to talk through your specific numbers with someone who does this every day.
