How much money do I need to retire?

Will your retirement be as pleasant as you are hoping?

Couple holding a piggy bank, symbolising superannuation.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

How much money does one need to retire… That's the golden question most investors contemplate at least on a semi-regular basis. In all, most of us invest in order to secure a comfortable, perhaps even early, retirement at the end of the day.

It's a difficult answer because the very question is so subjective. The answer varies on whether you're single or a couple, have grandiose or modest living standard expectations, and how much savings, both in and out of superannuation, you've managed to accumulate. Not to mention other factors such as your health, where you live or whether you like to travel.

Fortunately, we have some new comprehensive analysis on this very subject which sheds some much-needed light on these questions.

The Association of Super Funds of Australia (ASFA) has recently released its quarterly estimates for how much both a modest and comfortable retirement will cost the average retiree. This latest report covers the September quarter of 2023. It goes into how much funding either scenario will cost in terms of income and assets and makes for some interesting reading.

How much money will you need to retire?

So according to the report, a 'modest' retirement requires a superannuation balance of $100,000 for couples (across both accounts) for either singles or a couple at age 67.

Using a combination of the income stream or streams, from super, as well as the Age Pension, this should allow for an annual income of $46,620 for couples and $32,417 for singles, according to ASFA. This covers ages 65-84. After this age bracket, the assumptions bake in less spending and income.

If you instead want a 'comfortable' retirement, a couple will need a super balance of $690,000 for couples (across both accounts) and $595,000 for singles at age 67. Again combined with the Age Pension provisions, this could be expected to fund an income stream of $71,724 for couples and $50,981 for singles.

What's the difference between 'modest' and 'comfortable'?

You might be wondering what the difference between a 'modest' and 'comfortable' retirement in this scenario is. ASFA has done a comprehensive analysis of that question here.

But in a nutshell, a comfortable retirement allows additional spending on items like entertainment, food and international travel. In contrast, the modest retirement cuts down on these allowances and assumes infrequent domestic travel only.

So if you were wondering if you're on track for a comfortable or modest retirement, now you should have a good idea.

However, a big caveat to note here. This analysis assumes every retiree owns their own home. So obviously, the figures will have to change if we are to analyse the retirement prospects of someone not in that category.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Retirement

An older couple dance in their living room as they enjoy their retirement funded by ASX dividends

How to build a second retirement fund outside of superannuation

Find out the limitations of superannuation and how a separate retirement fund can help work less and live more.

Read more »

A woman wearing a bright multi-coloured dress, blue sunglasses and hat stands on a beach laughing with her arms outstretched enjoying herself

How much would I need to invest in ASX shares for a retirement income of $80,000 per year?

How big does the nest egg need to be?

Read more »

Five people are leaping in the shallows of the beach water as sunset shines gold on them.

Here are 2 ASX shares to buy for a golden retirement

Goldman Sachs is saying very positive things about these stocks.

Read more »

golden egg in a nest representing a SMSF investment

3 stocks I'd buy and hold inside a self-managed superannuation fund

These shares are some of my best picks for an SMSF investor.

Read more »

Loving senior couple at the swimming pool. Senior woman sitting on the edge of the pool and giving lemonade to her husband who is swimming.

Should I stick to only ASX dividend shares in retirement?

Dividend shares may be high-returning investments, but should you go all in for retirement?

Read more »

A happy elderly couple enjoy a cuppa outdoors as the woman looks through binoculars.

Retirees: Is the Australian pension enough to live on?

We dig into the numbers.

Read more »

A mature age woman with a groovy short haircut and glasses, sits at her computer, pen in hand thinking about information she is seeing on the screen.

Here's the average Australian superannuation balance at age 60 in 2024

The average super balance for an Aussie 60-year-old might shock you.

Read more »

Elderly couple look sideways at each other in mild disagreement

Should you combine your superannuation with your partner?

Like with most decisions, combining super has both pros and cons.

Read more »