The Number Is Your Spending, Minus the Age Pension
The amount you need is the capital that funds the gap between what you will spend and what the Age Pension will pay. Both halves are specific to your household, which is why a single national figure is a starting point rather than an answer — and why the published standards, which assume home ownership, differ so much from what a renter actually needs.
- The answer: Work out annual spending, subtract the Age Pension you expect, and fund the remainder from capital for the length of the retirement.
- The trap: The published retirement standards assume a homeowner. A renting household needs materially more, and no headline figure says so.
- The recommendation: Write down last year's actual spending before looking at any benchmark. It is the only input that is genuinely yours.
Where the AI summary above gets this wrong
"You need about $600,000 as a single person or $700,000 as a couple to retire comfortably in Australia."
That's surface-true. Here's what it misses:
- Those figures assume you own your home outright — The published standards are explicit about it. A household still paying rent needs a materially larger balance, and the gap is not a small adjustment.
- They assume a particular standard of living — The 'comfortable' benchmark describes a specific basket. A household spending less than that needs less; one spending more needs more, and neither is wrong.
- They net off the Age Pension already — The balance figures assume a part pension is received. A household whose assets rule that out needs considerably more than the headline number.
Take a couple at 60 trying to answer this for the first time — a composite of almost everyone who asks. They have read a headline figure, they do not know whether it applies to them, and they have never written down what their year actually costs.
01 Start from what a year costs
The only input that is genuinely yours is your spending. Last year's bank statements, categorised roughly, give a better starting figure than any benchmark, because they include the things your household actually buys.
Adjust it for what changes at retirement. Commuting, work clothes, and contributions to super stop. Travel, hobbies and health costs generally rise, at least in the early years, and the mortgage may or may not still be there.
Then split it into a floor and a discretionary layer. The floor is the number that has to be met every year; the discretionary layer is what you would defer after a bad market. That split is what makes the rest of the calculation tractable.
Do not annualise a good month. Household spending is lumpy — car replacement, dental, a roof — and a year measured without those understates the real figure by a margin that compounds across three decades.
02 Subtract what the Age Pension pays
Most Australian retirees receive some Age Pension, and for a household with moderate assets it is a substantial part of the income. Calculating it at your expected asset level is the second input, and it is the one people skip.
It is also dynamic in a helpful direction. As the portfolio is drawn down the pension rises, which means the capital does not have to fund the whole gap forever — the point made in the withdrawal rate post.
For a household whose assets rule out any pension, the whole spending figure has to come from capital, and the target balance is correspondingly larger. That is the case where the published standards understate the requirement most.
The pension also starts at Age Pension age. Someone retiring at 60 has a bridge period funded entirely from capital, and that period has the highest withdrawal rate of the whole retirement.
Source: Services Australia — How much Age Pension you can get
03 What the published standards measure
The retirement standards published by the industry describe budgets for a 'modest' and a 'comfortable' standard of living, for singles and couples, and state the balance needed to fund them. They are useful precisely because they are specific about what is in the basket.
They assume home ownership with no mortgage, and they assume a part Age Pension is received. Both assumptions are stated and both are routinely dropped when the figures are quoted.
The Grattan Institute's modelling of replacement rates reaches a different conclusion for many households: that a substantial share of Australians are on track to have more than they need, because spending falls through retirement and the pension is more generous relative to modest incomes than the standards imply.
Both are legitimate and they answer different questions. The standards ask what a defined basket costs; the replacement-rate work asks what proportion of working income households actually need. Your answer should come from your own spending rather than from either.
04 Turning the gap into a balance
The capital needed is the annual gap, funded for the length of the retirement, at some assumed return. Small changes in the return assumption move the answer a long way, which is why the number should be a range rather than a figure.
The worked example applies a gap, a horizon and a return. What it is most useful for is sensitivity: changing the return by one percentage point shows how much of the answer is assumption rather than arithmetic.
Add the one-off costs separately. A car every ten years, a roof, a kitchen, and the dental and hearing costs described in the healthcare post are real and are not in a monthly budget.
And check the answer against the balance you will actually have, not against a target. The gap between those two is the thing you can act on — by working longer, spending less, or contributing more — and the number itself is only useful because it makes that gap visible.
Shows: the capital needed to fund the gap between your spending and the Age Pension, for a given horizon and return. Ignores: the rise in Age Pension as assets fall, inflation on both spending and the pension, sequence of returns, tax, and one-off costs.
05 What to do with the answer
If the balance is comfortably above the requirement, the useful question changes from accumulation to spending: most Australians underspend in retirement, which the Retirement Income Review recorded as a systemic pattern rather than a set of individual choices.
If it is short, the three levers are time, spending and contributions, and they are not equally powerful. Working two more years typically does more than any plausible increase in contributions, because it adds returns, adds contributions and removes two years of drawdown at once.
If it is close, the honest answer is that the estimate has a range wider than the shortfall, and the response is to build in flexibility rather than to precision-target a number. A household willing to defer discretionary spending in a bad year has more margin than one committed to a fixed amount.
Then revisit it annually. The inputs move — markets, spending, the pension rates, your health — and a number calculated once at 58 and never revised is being applied to a household that no longer exists.
Everybody wants the number and almost nobody has written down what their year costs. The benchmark figures are answering a question about a standardised household, and yours is not standardised — you rent or you do not, you travel or you do not, you have a mortgage or you do not. Twelve months of bank statements beats every published figure.
FAQ
How much do I need to retire in Australia?
Enough capital to fund the gap between your annual spending and the Age Pension you expect, for the length of your retirement. Start from your own spending rather than from a published figure, and calculate the pension at your expected asset level.
What is a comfortable retirement in Australia?
The published retirement standards define a specific basket of spending for a 'comfortable' standard, and state the balance needed to fund it. They assume home ownership with no mortgage and a part Age Pension, and both assumptions are frequently dropped when the figures are quoted.
Do the published figures apply if I rent?
No. They assume outright home ownership. A renting household faces market rent for life against a capped Rent Assistance payment, and needs a materially larger balance.
What if I am short of the number?
Time, spending and contributions are the three levers, and time is the strongest. Working two more years adds returns, adds contributions and removes two years of drawdown at once, which no plausible increase in contributions matches.
Sources
Regulator references
- ASIC Moneysmart — Retirement planner · ASIC Moneysmart · 2026The regulator's own retirement income projection tool.Last verified: 2026-09-07
- ASIC Moneysmart — Retirement income · ASIC Moneysmart · 2026The sources of retirement income in Australia and how they combine.Last verified: 2026-09-07
- Services Australia — How much Age Pension you can get · Services Australia · 2026The current payment rates, and the March and September indexation that moves them.Last verified: 2026-09-07
- Retirement Income Review: Final Report · The Treasury · 2020The Retirement Income Review's final report on how Australia's three pillars fit together.Last verified: 2026-09-07
Research
- Money in Retirement: More Than Enough · Grattan Institute · 2018modelled replacement rates against the OECD's 70% benchmark, and which households actually fall shortLast verified: 2026-09-07
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-09-07 — initial publish (new format)
Model this trade-off against your actual numbers
Run the strategy against your real super, income and timeline — month by month.
Join the Waitlist
Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.