Author Topic: $1.1 million isn't enough to retire with a comfortable lifestyle in Australia  (Read 2478 times)


  • Pencil Stache
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An article in the Sydney Morning Herald business section.

'"The million-plus balance will allow someone to live a modest life - devoid of such indulgences as overseas holidays, a nice car and regular eating out - until age 94. To afford a comfortable retirement standard covering life expectancy, a current 30-year-old male would need a retirement benefit in 2048 of $1.58 million and a female, $1.76 million," Mr Mason said.'

No information on the withdrawal rate, or what actually constitutes a modest vs comfortable lifestyle, but the headline seems to be countered by the fact that you can live a modest life on $1.1 million until the age of 94 (and that's still $44,000 a year!). 


  • Walrus Stache
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To be fair, it sounds like they are accounting for inflation.  $1 mil in 2048 dollars isn't what it is today.


  • 5 O'Clock Shadow
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While the report doesn't set out its underlying assumptions, you can work them out - the report assumes inflation of 3% pa for the next 35 years.  The $1.1 million in 2048 is actually about $410,000 in today's dollars.

(In relation to withdrawals, it assumes a 7% pa drawdown with all capital eventually being consumed.)


  • Stubble
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If current pension levels and rules were in place in 2048 (a big call, I know), then by my calculations $410,000 dollars (in current day dollars) between a couple would be plenty enough for a comfortable lifestyle when you include the part pension, assuming they retire at 67.

It's a shame the report doesn't specify the amount for a comfortable lifestyle. My recently arrived superannuation statement tells me I need $41,000 as a single person per year in retirement to be comfortable. Ha!

I'm planning on retirement income of 35k for the two of us, which should yield a (nearby) overseas holiday every second year. That's more than comfortable.

Superannuation companies don't actually want you to retire, because then you stop giving them money.  My annual report also projects my future super balance using 3% returns after inflation, and shows this chart of savings disappearing to nothing at age 84. They have a nifty looking on-line calculator, but they don't actually let you change the return rate, the withdrawal rate or age at death. I'm sure they're just covering themselves, but it's as if it was designed to scare you into keeping working, and putting money into superannuation.


  • Walrus Stache
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The assumption made by the online calculators and the industry in general is that in retirement you need 75% of your pre-retirement income. I don't doubt that this assumption reflects reality for the vast majority of people out there.

But obviously it's not built for people like us.

So therefore please ignore it, and make your own plans to suit your needs.