Dear Vanessa,
My husband and I are in our late 50s, and we’re starting to think seriously about retirement. Honestly, it’s terrifying. We’d love to stop working at 65, but how do we know if we have enough? What if we retire and then realise we’ve made a huge mistake?
We’ve paid off our mortgage, and have $750,000 in retirement savings between us. We’re both earning decent incomes, but the more we look into retirement, the more anxious we feel. We keep seeing different numbers – some say we need $1million, others say we can get by with much less.
Our biggest fear is giving up work too soon and running out of money when we’re too old to do anything about it. What if we face unexpected medical costs? What if we want to help our kids with a house deposit? We also don’t know how much we’ll actually spend once we stop working – everyone says expenses drop in retirement, but what if they don’t?
Should we be doing something different with our super? Should we downsize? Invest more aggressively? Keep working longer? We feel stuck. How do we figure out how much we really need?
Jillian.
Dear Jillian,
First, take a deep breath – you’re asking all the right questions, and you’re far from alone in these fears. The thought of running out of money in retirement is one of the biggest concerns I hear, and for good reason. Once you leave work, the safety net of a steady pay cheque is gone. But the good news? There is a way to get clarity.
Let’s start with the numbers. The Association of Superannuation Funds of (ASFA) estimates that for a comfortable retirement, a couple needs about $72,148 per year (as of 2023). This assumes you own your home outright and qualify for at least a partial Age Pension later on.
Now, let’s run some rough numbers. With $750,000 in retirement savings, if you withdraw 5 per cent per year, that’s $37,500 annually – only about half of the ASFA figure.
You won’t qualify for the full age pension with $750,000 in assets. Based on estimates, you might receive about $23,000 per year, but this varies depending on your circumstances. You can check out the Centrelink Pension Estimator to get a more accurate figure.
This means your total income may fall short of what’s considered a comfortable retirement, depending on your circumstances.
The key now is making sure your savings continue to support your lifestyle throughout retirement. So what can you do?
• Track your current spending – most people don’t know what they actually spend. Try using a budgeting app or spreadsheet for a few months to get a real picture.
• Test-drive your retirement – if you think you’ll need $72,000 a year, try living on that amount now and see how it feels.
• Consider working part-time – even earning $20,000 a year for a few years can make a huge difference in stretching your super.
• Look at your investment strategy – if your super is in a low-risk option, it may not be growing enough to sustain withdrawals. Speaking to an adviser about investment options that balance risk and return is a smart move.
• Get professional advice – I strongly recommend speaking to a financial adviser to get personalised guidance on your situation. I offer a free matching service to help you find the right adviser for your needs.
Finally, remember this: Retirement isn’t about a magic number – it’s about how you want to live. Instead of fearing what could go wrong, start planning for what could go right.
You’ve got time, options, and the ability to shape your future. Take control now, and you won’t just retire, you’ll thrive.
Vanessa.