The Money Needed for a Comfortable Retirement

Written and accurate as at: 7 September 2015

Did you know that many of us will spend more than a quarter of our life in retirement? 

As a population, our life expectancy is now higher than it has ever been, meaning that retirement makes up a more significant proportion of our lives than previously thought. The average 65 year old is now expected to live until the age of 84 or possibly 87 if you are female. By the year 2050, this is predicted to rise to 91 years old for men and 93 years old for women.

Whether you dream of retiring and travelling the world, caravanning around Australia, pottering in the garden or improving your golf swing, the magic question remains the same for everyone: How much money will I need in retirement? 

The ASFA Retirement Standard Study is designed to provide Australians with a tangible retirement savings target and provide a clear idea of what type of lifestyle this target will afford them. The study provides guidance as to how much the average healthy Australian (who owns their own home) may need, after tax, to live across three lifestyle categories: Basic (Age Pension), Modest or Comfortable. The amounts are updated periodically in line with inflation. 

At the bottom end of the spectrum, the Basic lifestyle assumes that a retiree receives the Age Pension only. This is $22,365pa for a single person and a $33,717pa for a couple, including the pension supplement and clean energy supplement as at March 2015. Living solely on the Age Pension means a basic income, however it provides access to discounts on health services and energy costs. A basic income is designed for survival and is not an income level that many people are expected to live on by choice. Retirees who have had a moderate level of employment across their lives should successfully avoid this bracket. 

The second category is defined as a Modest lifestyle, where retirees will need an income of $23,662pa for a single person or $34,051pa for a couple. This income, whilst only marginally higher than the Age Pension, should give a retiree a slightly better lifestyle than if they were solely relying on social security, but would still only afford basic daily activities.

What does this lifestyle look like?

John and Fiona: A Hypothetical Case Study

John and Fiona are a married couple living according to the Modest lifestyle. In transitioning to this lifestyle, they have moved from a larger home to a small duplex that is closer to public transport to save on fuel and home maintenance costs. The pair have a small car they share, however are conscious of keeping the maintenance costs low so they can afford to keep it. They eat out at inexpensive restaurants occasionally, and can afford to participate in moderately-priced leisure activities such as going to the movies or attending recreational classes every month or two. Aside from these activities, the couple can afford low-cost local getaways from time to time, however overseas travel is outside their budget. John and Fiona have basic Private Health insurance, facilitating access to some personal and health maintenance services, though not the full gamut of therapeutic services they enjoyed whilst working. They are able to afford reasonable quality groceries (avoiding more expensive gourmet indulgences), mid-range fashion and basic cosmetic services (e.g. haircuts). The couple also now buy beer and wine wholesale. John and Fiona occasionally need support from their friends and family, but manage most daily needs independently. 

The last category – and by no means an extravagant one – is the Comfortable lifestyle. In this category single retirees will need around $42,861pa, whilst couples will need $58,784pa to fund their living costs. Living on this level of after-tax income will enable a healthy retiree to be involved in more recreational and leisure activities and a higher standard of living including some travel, better standard private health insurance and the ability to maintain or repair the home, car and appliances. 

So what happens to John and Fiona when they are Comfortable?

In a Comfortable lifestyle, John and Fiona have kept their larger family car and regularly use it for a range of social activities with friends and family, including yoga and sometimes golf. They purchase good quality food and wine and regularly dine out at different restaurants on the weekends. They are able to holiday interstate once a year if no other major expenses arise – overseas travel is still generally out of their budget – although some years they save on the holidays and instead might renovate part of the family home. Importantly, John and Fiona have a good standard of Private Health insurance and regularly access health maintenance and therapeutic services, as well as enjoying trips to the salon or spa from time to time. John and Fiona are an independent couple and don’t need to rely on their children or friends for financial assistance. It should be noted however that the Comfortable lifestyle still requires careful money management and budgeting to remain sustainable and both John and Fiona forego more expensive indulgences to ensure a good standard of living. 

Lifestyle is a very personal thing. What is modest lifestyle for one person may be extravagant to another. For those wanting a more comfortable life in retirement or that have particular lifestyle desires for older age, now may be the right time to start thinking about what that looks like and how you will get there

According to the Australian Bureau of Statistics around 1.8 million people rely mainly on the Age Pension for their income in retirement. But if you’re someone who is hoping to live a more comfortable lifestyle in retirement, the extra income needed to afford this level of comfort will need to come from superannuation and non-superannuation savings and investments.  This may mean that you need to consider contributing more to superannuation now or making some sacrifices to help you save more and build your retirement savings

How much you need to accumulate in investment assets might also need to include an inheritance you wish to pass on to future generations if that is a priority for you personally. In addition, the amount of investment assets required for the income you will need will also be influenced by the investment return you expect to receive and whether you want to retain your capital or eat into your capital over time. Such considerations can be discussed with your financial adviser if you decide that it’s time to start planning for retirement. 

ASFA Retirement Standard Study – Budget Expectations for Retirement Lifestyles

Lifestyle Expectation / Spending Habits

Age Pension *

Modest Retirement

Comfortable Retirement



$22,365 pa

$33,717 pa

$23,662 pa

$34,051 pa

$42,861 pa

$58,784 pa


Limited to short breaks or day trips in own city

One or two short breaks near your home

One annual holiday in Australia

Groceries and Dining Out

Limited Grocery budget

Discount meals or inexpensive takeaways

Cheaper and less food than a Comfortable lifestyle standard Infrequent dining out at inexpensive restaurants

Good range and quality of groceries

Regularly eat out at restaurants

Leisure Activities

Low cost or no cost activities

Infrequent trips to cinema

Can partake in some paid leisure activities

Some trips to the cinema

Can take part in a range of regular paid leisure activities and trips to the cinema

Car Ownership

No car or if owned, can be difficult to afford maintenance and repairs

Likely to own an older and less reliable car, can afford some level of repairs and maintenance

Ownership of a reasonable car and regular maintenance and repairs

Home Improvements

No budget for home maintenance and repairs

Budget for home repairs but not improvements

Ability to repair and improve home including replace kitchen and bathroom over 20 years


Basic clothing

Reasonable clothing

Good clothes

Alcohol Consumption


Regular, mostly cheap cask wine or beer

Regular good wine and beer

Personal Care

Less frequent haircuts and discount personal care

Regular haircuts at basic salon

Afford regular haircuts

Home Appliances

Less heating in winter / cooling in summer

Not likely to be able to afford air conditioning.

A range of electronic appliances owned and used

Private Health Insurance

No private health insurance. Public health system support only.

Private health insurance

Private health insurance

* Maximum age pension payment rates as at 1 July 2015 (including supplements)