How much is enough?

The money you live on in retirement will likely come from various sources. How much money you might need to fund your retirement is different for everyone. Take steps now to know the main pillars of your retirement planning and what they mean for you.

Two young grandchildren sitting with grandpa reading

Calculate your potential income in retirement

To get a realistic view of your income in retirement, compare your current after-tax income with your potential net defined pension.

Replacement ratio made simple

Thinking about how much money you’ll need in years from now may seem complex. The replacement ratio method is a simplified approach to estimating how much income you’ll need to maintain your pre-retirement lifestyle.

The ratio most cited is 70% to 85% of your pre-retirement income¹. Influencing factors include:

decreasing taxes due to extra deductions and tax-free amounts;
reduced payments due to whether you own, rent or downsize; and
reduced costs of clothing and commuting.

¹ How much super you need - Moneysmart.gov.au

Replacement ratio shortcomings

However, replacement ratios can be problematic because a one-size fits all approach doesn’t include your individual circumstances. Your situation may require a rate of 100% of your pre-retirement income—or more.

Replacement ratios ignore whether there is enough income to maintain that level of spending throughout retirement. Influencing factors include:

increased medical expenses;
increased travel or lifestyle expenses;
increased costs of supporting adult dependents or grandchildren; and
increased additional services to assist with at-home living.

To achieve a more personalised and confident estimate, it’s worth taking the time to consider key details about your health, lifestyle, goals, income and spending.

For more information about retirement decision-making steps, see our self-paced Retirement Ready online program.

Changing needs and wants

Your needs and wants will change over time as you move from a more active phase to a passive phase and finally to a frail phase. These changes can impact the amount of money you might need.

The active phase: age 60 to 65

You'll spend more on your lifestyle, leisure and family activities. You'll use your new free time to do the things you may have missed out on when you were in the workforce.

Watch for 'lifestyle creep'. It's easy to spend more money when you have more free time. Check your retirement budget to make sure you're sticking to your plan.

Consider reviewing your investment options. If your balance is high and the market looks unstable, you could choose a lower-risk investment option to keep your income stable and avoid drops in your retirement money during occasional market downturns.

If the market looks strong, you might take advantage and invest your higher balance on a higher risk, higher return investment option to grow your super while you're accessing it.

The passive phase: age 65 to 75

Even if you’re not able to journey far from home, you’ll still have lifestyle costs. These could include making your home more suitable for your health needs, engaging more paid services such as lawn mowing, or travelling short distances to visit family.

You might give up paid work and take up volunteering. You’re more likely to monitor your retirement income balance and swap some nice-to-have spending with saving for emergencies or care in your later years.

Consider downsizing your home. If you downsize, you could invest up to $300,000 in your retirement savings. If you’re a couple, you can each contribute $300,000 to your retirement income. Visit the ATO to find out more about downsizer contributions.

The frail phase: age 76+

You may experience restricted mobility or need assistance with daily activities to live independently. This could reduce your appetite for travel and leisure activities.

Most of your money will go towards essentials such as food and medical expenses. You might need to look at options for nursing home or hospital care. You might take a lump sum from your retirement savings to modify your home or cover the cost of care.

Review your estate plan so your family know your personal and financial intentions.

This section contains:

Step 1. Get to know the ASFA retirement standard

Every three months, the Association of Superannuation Funds of Australia (ASFA) estimates how much money a single person or couple will need to live a 'modest' or 'comfortable' lifestyle in retirement.

The ASFA Detailed budget breakdown assumes retirees own their primary home outright, and are in relatively good health. If you don't own your own home or are in poor health—your cost of living will be higher.

A modest lifestyle means there's enough to cover the basics. This lifestyle is considered slightly better than living on Age Pension alone.

A comfortable lifestyle means there's enough to cover running costs plus it funds your ability to:

buy good clothes
participate in a range of recreational activities
drive a reasonable car
own a range of electronic equipment
travel domestically and take an occasional overseas holiday
have private health cover
buy household goods.

ASFA estimates the amount of super needed to achieve each lifestyle for the average human lifespan. These are general estimates only and a comfortable retirement will look different for everyone.

The table shows the ASFA Retirement Standard at March 2024.

ASFA Retirement standard	Single (per year)	Couple (per year)
Modest	$32,915	$51,630
Comfortable	$47,387	$72,663

Use the Super Guru Super Balance Detective to see how much super you might need today for comfortable retirement.

Seek financial advice from an authorised Financial Planner to consider your options and your unique circumstances.

Step 2. Work out your retirement spending

Create a budget

You need a budget to work out how much your retirement lifestyle might cost. Try the ASFA Detailed budget breakdowns and remove expenses you won't need when you retire. For example, you might remove your mortgage costs if you pay off your home at or before retirement.
1. Expenses that could remain unchanged:
  - food and drink
  - rent or mortgage payments
  - rates, water and power bills
  - life, vehicle, house and contents insurances
  - private car expenses and fuel
  - home office costs, including internet.
2. Expenses that could decrease or disappear:
  - car parking payments
  - tickets and costs of your normal daily commute
  - morning coffees and lunches out
  - staff club, team celebrations and gift contributions for workmates
  - income protection insurance
  - work uniforms.
3. Other expenses:
  - entertainment costs
  - materials and equipment for that new hobby
  - day passes, green fees and annual passes for your sports and travel
  - membership fees for clubs and organisations
  - newspaper, magazine and online subscriptions
  - medical fees
  - travel costs.
Compare your budget

Use the Super Guru Retirement Tracker tool to see what kind of retirement you can afford.
- Enter your gender, age and relationship status.
- Select the Modest or Comfortable tab to see the ASFA results.
Repeat this process cyclically

Budgeting is a continuous process you’ll need to revisit as inflation changes and as you age. Your needs and wants will change as you move through the three phases of retirement (from active phase to passive phase and finally to the frail phase). These changes can impact the amount of money you might need.

If you’re renting

Housing costs will be a significant part of your budget when you retire.
The assets test for Age Pension adjusts for this (you can own a higher value of assets than a homeowner before your Age Pension is affected).
You may also be eligible for Centrelink rent assistance.

For more information visit Moneysmart.

How to work out what you currently spend

Track what you spend:

Where does your money go each day, week, fortnight, year?
Record your expenses each day.

Compare money in and money out:

What money comes in? Is there any extra from any other source?
Where does your money go?
When do your bills arrive? Do you have money set aside for them?
Your bank, apps, even a spreadsheet can help break down your spending.

Prioritise where you want your money to go:

Cover your essential costs.
Pay down debt early to save on interest.
Save for renovations, a new car or holiday.
Consider investing any spare funds—maybe in your super.

Take action:

Shop around to get good deals on your basic bills.
Simplify bill payments by using either direct debit or automatic scheduled payment options.
Take control and check your budget as often as you can, at least once a year.

Step 3. List your retirement income

To know if your current super arrangements will support your retirement goals, you need to estimate how much your super will contribute to your total retirement income, as well as other potential sources of income, such as investments and other assets.

And retirement planning is more than just super—it can also include insurance, other investments like property or shares, pensions, and retirement income products.

When you retire, you may qualify for a part Age Pension. To be eligible for Age Pension, you must meet age and residency conditions, and your income and assets must be below the limits set by Services Australia.

Do you have super you’ll convert to an income stream?
Will you apply for a CSC retirement profile that includes a Challenger annuity?
Will you qualify for a part or full Age Pension?
Do you have savings you’ll use or investment earnings from shares?
Will you downsize your home and use some of that money to pay off your mortgage and fund your retirement?

Use the Moneysmart retirement planner to estimate how much money you’ll have to spend each year when you retire.

To get a realistic view of your income in retirement, compare your current after-tax income with your potential income from super and Age Pension.

As a member of a Defined Benefit fund, the amount you get at retirement (your retirement benefit) is defined in your fund rules. It’s usually calculated using a formula that is based on:

the amount of contributions made by your employer, and contributions made by you (including extra contributions);
your length of employment with the employer; and
your final average salary when you retire.

Find out more at How Super Works | Superannuation | Members - CSC

Estimate your net income in retirement [PSS & MSBS only]

Use our i-Estimator to work out what your net (after-tax) pension might look like and when you might be able to leave work, depending on your unique circumstances. [link] It’s an estimation designed to assist your long-term super planning.

Generally, you’ll see a reduction in tax withheld from your fortnightly pension when you turn 60, so it’s important to understand the likely amount of your Defined Benefit pension after tax—both before and after you turn 60.

If you’re intending to leave employment or claim your benefit in the next 12 months, complete our Estimate Request form to request a Benefit Estimate.

Government benefits

On the day you claim Age Pension, you must be an Australian resident who lives in Australia and is physically in Australia.

You could be eligible for these benefits:

For more information about Age Pension and government benefits, visit Moneysmart.

Step 4. Understand life expectancy

Life expectancy is the average number of years a person can expect to live and is affected by health history, genetics and lifestyle. At CSC we use average life expectancy ages in super modelling tools to calculate how long your super and Age Pension income are likely to last.

Research indicates that with life expectancy on the rise, many of us will spend more than a quarter of our life in retirement. Australians are living longer: if you turned 65 in 2021, you could expect to live to 85 if you’re a man and 88 if you’re a woman.²

Try the Lifetime estimate calculator to estimate how many years you might expect to live in retirement, and how long your retirement income may need to last. It relies on on current Australian Bureau of Statistics (ABS) and Australian Government Actuary data.

When life expectancy numbers aren’t so important

If you have an exceptionally large super balance (approaching the top of the transfer balance cap) or a smaller balance that makes you eligible for more government support, life expectancy numbers don’t matter as much.

If your super balance is high: your investment returns are likely to keep your balance healthy without eroding too much of your capital.

If your super balance is low: your main source of income will probably be Age Pension. You’ll likely use your super for top ups and emergencies.

² AIHW , Deaths in Australia, Life expectancy (accessed 30 October 2023).

How should I retire?

Whether you’re thinking creatively about working longer or dipping in and out of the workforce, phasing your retirement gives you flexibility. You can adjust your work pattern to suit your lifestyle and ease into retirement on your terms.

For more information read Transition out of work.

When (or why) will I retire?

Deciding when to retire is a personal decision, however there are five factors that generally influence when or why people retire. They can often trigger a decision to retire— earlier than expected.

Health: You may have a health scare or issue that means you can no longer do your job. You may also decide to retire to care for a loved one.
Work: The demands of work can become more tiring as you get older, or you may be out of work because of redundancy or the end of a work contract.
Friends and family: Retirement may be appealing if your friends or family are enjoying retirement.
Financial independence: You may reach pension age, receive a financial windfall, or find that you have more financial resources after children leave home.
The right time: It may simply feel like ‘the right time’.

For more information read Access my super.

Where to next?

Attend our How much is enough? webinar and join the conversation with our experienced Member Education team. You’ll learn about the ASFA Retirement Standards, budgeting tips, and how your costs in retirement might change.
Visit Services Australia and check out their financial webinars on offer through the Financial Information Service.
Expand and organise your thinking with our self-paced Retirement Ready online program and discover practical and thoughtful decision-making steps.
Join our 3rd Act community and receive smart, interesting quarterly newsletters straight to your inbox.
For MSBS and DFRDB customers, connect with our ADF community as you prepare for life after service and join our Vets Hub.

Financial planning

We’re here to guide you. Meet with a CSC Financial Planner

Before making any decisions regarding your super, consider your options and have a conversation with an authorised CSC Financial Planner. To book your appointment with an authorised Financial Planner, call us on 1300 277 777.