Retirement – how much is enough?

At some point in our lives we’ll all retire. And, we hope that we can retire with enough money to enjoy all the things that we couldn’t actively pursue during our working years. For some people it may mean travelling (when we can!), home renovations or simply spending more time with family and friends. Ultimately, you’ll want enough money to live comfortably and safe in the knowledge you won’t run out of money and have to go back to work, unless of course you want to.


When you retire, your superannuation, assets and other investments are your sources of income. You no longer have a regular salary coming in and you rely on these savings to fund your living expenses. 

Firstly, how much are you likely to spend?

The ASFA Retirement Standard provides a picture of how a modest lifestyle compares to a comfortable lifestyle and how much you’re likely to spend to maintain each of these two standards of living.

A comfortable lifestyle includes extra items that are considered to be ‘comforts’, such as updating the kitchen or bathroom, having private health insurance at the top rate and enjoying an occasional holiday. 

The ASFA figures in table 1 estimate that, for a couple to maintain a modest lifestyle in retirement, they’ll likely spend around $791.73 per week compared to a couple who wish to live a comfortable lifestyle who are likely to spend not quite double that, at around $1,218.30 per week. 

However, both of these weekly budgets assume that you own your home so it doesn’t include the cost of rent or mortgage repayments.

Table 1: Weekly spend – modest versus comfortable lifestyle

 Singles Couples
   modest  comfortable modest comfortable
Weekly spend  $548.35  $861.88 $791.73
Source: ASFA Retirement Standard, June 2021. Assumes client retirement age of 65.
Note: Single calculations are based on a female who is relatively healthy and owns her own home.

What about the age pension?

If you’re relying on the age pension and, like most of us, are planning on a comfortable lifestyle in retirement, you’ll have a gap of $385.53 per week if you’re single ($861.88 - $476.35) or a gap of $500.20 per week ($1,218.30 - $718.10) if you’re a couple. Although the age pension is there as a social security safety net, it’s not an ideal level of income to live comfortably.

Table 2: Current maximum basic Centrelink age pension rate

Maximum age pension (weekly)
 Single Couple
 $476.35  $718.10
Source: Centrelink 1 July 2021

How can super help you save?

Super is a good way to save for retirement, especially if you start making extra concessional contributions.


How to make additional concessional (‘before tax’) contributions

Concessional contributions are contributions made to super ‘before tax’ (eg salary sacrifice contributions, which not subject to income tax – see below). Additional concessional contributions can reduce your taxable income and your end-of-year tax liability. Concessional contributions are subject to just 15% tax on entry to your super fund compared to your upper marginal tax rate which could be as high as 45% (plus 2% Medicare levy) if you’re in the highest tax bracket (see current income tax thresholds below). Concessional contributions are also subject to the $27,500 concessional contribution cap (you may be able to make more than $27,500 in concessional contributions in a financial year under ‘carry-forward’ concessional contribution rules).
Note: an additional 15% tax may apply to concessional contributions if your income is over $250,000 in the financial year.
There are two ways you can make concessional contribution, both of which have the same tax benefit:
Salary sacrificing comes out of your pre-tax salary and reduces your net taxable income, meaning you may pay less tax on your personal income.
Personal deductible contributions are made by you directly, on which you can then claim a tax deduction when completing your tax return. If you choose this method, you’ll need to submit a ‘Notice of intent to claim a tax deduction’ form to your super fund before you lodge your tax return and no later than the end of the following financial year and receive acknowledgement from the super fund. (Note: you need to submit your ‘Notice of intent form’ prior to making any withdrawals or starting a super pension, if you’re eligible.)
To find out if you’re on track for a comfortable retirement, the Governments Money Smart retirement calculator can help.


Resident tax rates 2021–22
Taxable income Tax on this income
0 – $18,200 Nil
 $18,201 – $45,000  19 cents for each $1 over $18,200
 $45,001 – $120,000  $5,092 plus 32.5 cents for each $1 over $45,000
 $120,001 – $180,000  $29,467 plus 37 cents for each $1 over $120,000
 $180,001 and over  $51,667 plus 45 cents for each $1 over $180,000
The above rates do not include the Medicare levy of 2%.

Important information: If you have any questions, please contact us or your financial adviser. If you don’t have an adviser, we can put you in touch with one.
IOOF Investment Management Limited (IIML) ABN 53 006 695 021 AFSL 230524
This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this information, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.