Retirement Needs

How much money do you need in retirement?

The most accurate way of assessing your retirement needs is to work out a realistic budget.

However, if that’s a daunting prospect, a good rule of thumb is approximately 60%-70% of your pre-retirement income.

So how much do you need in dollar terms per annum?

Annual pre-retirement income ($)

70% ($)

60% ($)

100,000

70,000

60,000

80,000

56,000

48,000

60,000

42,000

36,000

55,000

38,500

33,000

50,000

35,000

30,000

45,000

31,500

27,000

40,000

28,000

24,000

30,000

21,000

18,000

Once you have determined your required annual income, you then need to establish exactly how big your retirement nest egg needs to be to provide that level of income for life.

The table below shows the level of capital required for some income levels, assuming retirement at age 65 years:

Desired annual retirement income*

Capital required if earning 6% pa

Capital required if earning 8% pa

$60,000

$966,641

$796,642

$55,000

$886,088

$730,255

$50,000

$805,534

$663,868

$45,000

$724,981

$597,481

$40,000

$644,428

$531,095

$35,000

$563,874

$464,708

$30,000

$483,321

$398,321

$25,000

$402,767

$331,934

$20,000

$322,214

$265,547

*Figures are indexed at 3% pa to reflect the effects of inflation. Centrelink entitlements and tax are excluded from the calculations. Calculations are based on a female retiring at age 65 with an average life expectancy of 22 years.