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Financial planning for retirement in your 40s, 50s and 60s

Financial planning for retirement in your 40s, 50s and 60s

Retirement these days looks very different to how it looked decades ago. Dramatic increases in life expectancy and the rising age of parenthood are just some of the social changes that have transformed the way we retire.1

On top of living longer, we’re also working longer – Australians aged 65 and over now have a workforce participation rate of 13% compared to just 8% in 2006.2 It’s likely this trend will continue, with the retirement age set to move closer to 70 years. According to the Australian Bureau of Statistics, the age at which Australians intend to retire now sits at 65 years, up from 63 years a decade ago.3

Despite working longer, though, many Australians are still not financially prepared for retirement. Average superannuation balances at the time of retirement are around $270,710 for men and $157,050 for women, with many retirees still reliant on the age pension.4

However, the age pension is often criticised as being inadequate for a comfortable standard of living, and the qualifying age is increasing.5

So how much do you really need to retire?

There’s no simple answer, since it depends on a range of factors. Here, we provide a guide to help you work out how much you’ll need to retire depending on your personal situation and whether you plan to retire in your 40s, 50s or 60s.

How much do you need to retire in your 40s?

Retiring in your 40s is an exciting prospect, with four fruitful decades left to live the way you want, on average.6 But statistics show only about 5% of people retire by this age bracket.7

Consider an average man, aged 45, who wants to retire this year. He earns $100,000 a year and has a balance of $200,000 in his super account. To live comfortably, the Association of Superannuation Funds of Australia (ASFA) suggests he needs $42,953 per annum.

ASIC's retirement planner, however, estimates his retirement income will be well below that. In fact, even if he kept working until 59 he would still only have around $29,777 per annum. Based on his income and super balance, he’ll need to be working a while longer if he wants to retire comfortably.

How much do you need to retire in your 50s?

Fifty may be the new forty in terms of lifestyle, but that extra 10 years can make a big difference when it comes to retirement. Consider again the average man who plans to retire at 45. If he keeps working until 59 and makes periodic payments into his super balance, he’ll be left with $400, 000 in superannuation. ASIC’s retirement planner now estimates that his income will be around $30,259 per annum.

If he decides to live modestly, cutting back on expensive luxuries, he’ll only need $27,425 a year to retire, according to the AFSA calculator. He’s got that and more. With the additional $2,834 each year, he may even be able to keep saving or enjoy some of the finer things in life.

Remember, the type of lifestyle you want in retirement plays a big part in determining how much money you’ll need. Do you want to take overseas holidays? Or are you content to explore your local area? Do you want to dine out at places you’re accustomed to? Or will you hone your home-cooking skills instead? You may even decide to grow your own produce to cut back on grocery costs. All of these will make a considerable difference to your finances, so think carefully about your spending habits and how they’re likely to affect your retirement.

How much do you need to retire in your 60s?

By the time we reach our 60s, retirement is a realistic goal on all of our minds. Due to a longer spell in the workforce and more time saving, this is the most common and easiest age bracket to retire in. In fact, the workforce participation rate for Australians aged 65 years and over is only 13%8, which highlights the ever-growing trend to exit the workforce by this age.

Like at any age, though, you need to consider exactly how much you’ll need to retire. ASIC’s retirement planner and the AFSA calculator can help you decide what is required in your specific situation. The good news is that you may not need to do the same level of planning or budgeting if retiring in your 60s as your super balance will likely be higher. This makes planning for your golden years much easier.

Again, you’ll need to think about the big factors that will influence how much money you’ll need, including future medical costs, lifestyle considerations and even your relationship status. Retiring as a couple can have significant financial benefits, too, as you’re able to share expenses.

Planning your retirement at any age

No matter what stage of life you plan to finish work, you need to keep an eye on any changes in government policy or legislation that may affect the size of your lump-sum savings. Get advice, if necessary, about limiting any negative impact of proposed changes.

It’s also a good idea to get advice on the income streams that may be available to you in retirement, along with any investment options that could support your plans.

It’s never too late to start thinking about retirement, although the earlier you start planning the more you may be able to enjoy your retirement years.


  1. Deaths in AustraliaAustralian Institute of Health and Welfare
  2. Older Australians at a GlanceAustralian Institute of Health and Welfare
  3. More Australians intend to work longerAustralian Bureau of Statistics
  4. Superannuation account balances by age and genderThe Association of Superannuation Funds of Australia Limited
  5. The adequacy of the Age Pension in Australia: An assessment of pensioner living standardsWarwick Smith and David Hetherington
  6. Retirement and Retirement Intentions, Australia, July 2016 to June 2017Australian Bureau of Statistics
  7. Older Australians at a GlanceAustralian Institute of Health and Welfare