Retirement Planning in Australia 2026: How Much Do You Need and How to Get There

The Association of Superannuation Funds of Australia (ASFA) publishes quarterly "Retirement Standard" figures - the most widely used benchmark for retirement income needs:

ASFA Comfortable Retirement (2025–26):

• Couple: ~$72,148/year
• Single: ~$51,278/year
• Assumes: home ownership, good health, moderate leisure activities, reasonable travel, car ownership

ASFA Modest Retirement (2025–26):

• Couple: ~$45,956/year
• Single: ~$31,323/year
• Assumes: home ownership, some leisure, limited travel, very tight budget

The "comfortable" standard is generally the aspirational target. It assumes you own your home outright - renters need significantly more, as rent becomes a major expense in retirement.

The 25x rule: A useful rule of thumb is to target a nest egg of 25 times your desired annual expenses (this implies a 4% annual drawdown rate). If you want $60,000/year in retirement income, you'd need approximately $1.5 million - though the age pension reduces the amount of super you need to fund independently.

Super balance targets: The Association of Superannuation Funds suggests a balance at retirement of approximately:

• Single (comfortable): ~$595,000
• Couple (comfortable): ~$690,000 combined

These are guides only. If you receive a full or part age pension, you need less from super. If you rent rather than own, you need more.

The age pension is available to Australians who meet eligibility criteria, and it forms a crucial part of most Australians' retirement income - either as a full pension or a partial (part pension) top-up:

Eligibility criteria:

• Age: Must be 67 or older (born after 1952)
• Residency: Must have been an Australian resident for at least 10 years, with at least 5 years continuous
• Means test: Must pass both an assets test and an income test

Age pension rates (2025–26, approximate):

• Single: ~$1,116/fortnight ($28,514/year) including supplements
• Couple (combined): ~$1,683/fortnight ($43,009/year) combined

Assets test thresholds (homeowners, 2025–26):

• Single: Full pension up to ~$301,750 in assets; cuts out at ~$656,500
• Couple: Full pension up to ~$451,500; cuts out at ~$986,500
• Superannuation counts as an assessable asset once you reach pension age

Income test:

• Income up to $204/fortnight (single) is disregarded
• Pension reduces by 50 cents for every dollar of income above the threshold

Deeming rules: Financial assets (including super in accumulation phase once you turn 67) are "deemed" to earn income at set rates, regardless of actual returns. This affects pension calculations - it's worth understanding if you're close to the thresholds.

Healthcare is one of the biggest unplanned expenses in retirement. Australia's Medicare system provides the foundation:

• Medicare: Free or subsidised access to GPs, specialists, and public hospital treatment for life. Bulk billing means many GP visits cost nothing.
• Pharmaceutical Benefits Scheme (PBS): Subsidised prescription medications. Pensioner rates further reduce out-of-pocket costs.
• Private health insurance in retirement: The Lifetime Health Cover loading increases your premiums if you take out hospital cover after age 30 - so maintaining cover through retirement, even at a lower level, is often more economical than letting it lapse.
• Aged care: When you or a family member eventually needs aged care, costs are means-tested and partially covered by the government. Planning ahead (see the separate aged care guide) is worthwhile.

Tip: If you're a Centrelink-eligible retiree, the Pensioner Concession Card gives you lower-cost medications, bulk-billed GP visits in most areas, and state concessions on utilities and transport - worth hundreds to thousands of dollars per year.

If you're aged 55 or older and sell a home you've owned for at least 10 years, you can make a downsizer contribution of up to $300,000 per person ($600,000 per couple) into super from the proceeds - outside the normal contribution caps.

This is a powerful strategy for older Australians who have significant home equity but lower super balances. The contribution is taxed at 15% in the fund (same as other super), and the proceeds inside super generate concessionally taxed investment returns.

Points to note:

• Downsizer contributions count toward the assets test for the age pension - putting a large sum in super may affect pension eligibility once you reach pension age
• The contribution must be made within 90 days of receiving the sale proceeds
• You don't have to actually downsize - you can sell one property and buy an equivalent or larger one; the rules relate to the contribution, not your future housing choice

From your preservation age (age 60 for most Australians), you can start drawing from super via a Transition to Retirement Income Stream (TRIS) while still working:

How TTR works:

• You draw between 4% and 10% of your super balance per year as income
• Your employer continues making SG contributions
• You can increase salary sacrifice contributions to replace the TRIS drawdown - reducing taxable income while keeping your take-home pay stable

Tax benefit: From age 60, TRIS payments are tax-free. Combined with increased salary sacrifice (which reduces assessable income), a well-structured TTR can meaningfully reduce your tax bill in the final years before full retirement.

Is TTR right for you? It depends heavily on your specific numbers - income, super balance, years to retirement. This is one area where a licensed financial adviser genuinely adds value for most people.

An increasing number of Australians choose to work past traditional retirement age, either for financial reasons, mental engagement, or both. Key things that change at 65:

• You can access super regardless of employment status - no need to "retire"
• Employer SG contributions continue until you turn 75
• From age 67, your super balance is assessed under the age pension assets and income tests - even if it's still in accumulation phase
• If you're still working, you continue paying income tax on employment income, but super payments from age 60 are tax-free
• Consider whether your will, binding death benefit nominations, and power of attorney documents are current

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