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How much will you need to cover the cost of living in retirement?

Retire couple laughing

There's a lot of chatter about hitting one magic number – often a million dollars - before you retire. But the thing is, the price rises you feel today at the checkout or on your power bill don't just disappear the day you stop working, they follow you into retirement too, making one set number too rigid to plan around. Energy bills have jumped since rebates ended late last year, health insurance premiums keep creeping up, and it all adds up to the same nagging question: will I actually have enough? 

It's a good reminder that cost of living isn't something you plan for once and forget about. It keeps shifting, which means your retirement plan should be flexible enough to shift with it, rather than resting on a single number you set years in advance. So how do you create that plan?  

Price rise reality 

When there’s so much noise around cost of living rises, it can feel overwhelming. So let’s look at what’s going on. If you've noticed your power bill creeping up, you're not imagining it: electricity prices jumped over 32% in the year to January 2026, largely because the government's energy rebates wound up at the end of 2025.1 Health insurance premiums have also nudged higher, and there's a proposal currently before Parliament that could trim the government rebate on premiums even further for some members.2 

But it's not all bad news: as of January 2026, the most you'll pay for a lot of common medicines on the PBS actually dropped, from $31.60 down to $25, and if you hold a concession card, your $7.70 co-payment is locked in until 2030.3 These ups and downs are just some examples of why it’s important to have some flexibility in your plans.  

What influences how much super you need 

A useful starting point is thinking about your retirement costs in categories, rather than as one lump figure: 

  • Essential living costs – housing, utilities, groceries, insurance and transport 
  • Discretionary spending – travel, dining out, hobbies and leisure 
  • Health care costs – private health insurance, medications and out-of-pocket medical expenses 
  • Aged care costs – in-home support or residential care, if you need it later in retirement 

As a general rule of thumb, aiming for around 70% of your current take-home pay is a reasonable starting point for your retirement income – though where you land within that will depend on your own mix of the categories above.  

What the ASFA Retirement Standard tells us 

The Association of Superannuation Funds of Australia (ASFA) publishes a Retirement Standard each quarter, estimating the annual budget needed for a ‘modest’ or ‘comfortable’ retirement – shown in the table below.4 Here’s the interesting part: those income figures have risen steadily each quarter with the cost of living, but the lump sum ASFA says you need at retirement barely moved for three years – it only increased in February 2026, to $630,000 for a single person and $730,000 for a couple (comfortable), or $110,000 and $120,000 (modest). That’s because the Standard reflects real retiree spending patterns – renovations, holidays, health needs – rather than a number that moves in lockstep with any one price rise. 

ASFA Retirement Standard – weekly and annual living costs (March quarter 2026) 
 

 Couple (weekly)Couple (annual)Single (weekly)Single (annual)
Comfortable$1,511$78,566$1,075$55,923
Modest$1,009$52,473$701$36,434

 

Figures assume the retiree(s) are aged 65–84, own their home outright. 

What’s modest vs comfortable? It’s the difference between having top private health cover and a basic plan, getting out and about regularly to things like the cinema, galleries or a class versus only occasionally and using your utilities however you like or being quite mindful of your bills, A comfortable budget assumes you’ll take an overseas trip every seven years and a domestic one annually, while a modest budget doesn’t account for any overseas trips.  

Whether you own your home outright, are still paying off a mortgage, or rent, makes a big difference to your numbers. ASFA’s modest budget for a single homeowner is $36,434 a year – but for a single renter, it’s $51,164, once the cost of private rent is factored in. If you’re not mortgage-free by the time you retire, or you’re renting, it’s worth building your plan around your actual housing costs rather than the homeowner assumption most retirement figures are based on.  

Spending isn’t flat across retirement 

Retirement spending doesn't typically stay static - many retirees spend more in the early years on travel, leisure and major purchases, before spending gradually declines, and then potentially rises again later due to healthcare or support needs. For this reason, pension drawdowns often begin above the minimum and reduce over time. The key is maintaining flexibility and managing spending as your circumstances change, rather than focusing solely on a single retirement savings target.

SASS spending needs chart

Build in a buffer and stay flexible

Building a buffer is just as important as funding your day-to-day living expenses, so you’re prepared for unexpected events such as health costs, home repairs, or helping family members. It’s generally easier to plan for these contingencies before you retire than to adjust your retirement lifestyle or finances without a safety margin once you’ve already retired. 

Plus, because assumptions behind any retirement plan – costs, health, family circumstances – will shift over time, it’s worth revisiting them rather than setting your plan once and filing it away. This is exactly where an ongoing relationship with an Aware Super financial planner can be very helpful: someone you can check in with as your circumstances and needs change, not just once before you retire.

Get expert help with your retirement planning

A financial planner can help stress-test your assumptions, identify issues or gaps, and build a realistic buffer for retirement. Book an appointment to see whether you’re on track to achieve your retirement goals.   

Your first appointment with an Aware Super financial planner is free of cost or obligation. Book an appointment at aware.com.au/statesuperadvice or call 1800 841 633. 

FAQ

Not necessarily. ASFA estimates a comfortable retirement needs a lump sum of $630,000 for a single person or $730,000 for a couple, factoring in a part Age Pension. $1 million would give you more of a buffer, but what matters more is matching your plan to your own spending and housing situation.

You don’t need to, but owning your home (particularly mortgage free) makes a difference to the numbers. Renters need a noticeably higher income to reach the same standard of living – ASFA’s modest budget is around $15,000 a year higher for a single renter than a single homeowner – so it’s worth factoring your actual housing costs into your plan.

ASFA’s figures are based on retiring at 67 and assume a part Age Pension contributes to your income from that age. Retiring at 60 means funding up to seven extra years yourself before you’re eligible for the Age Pension, so you’ll generally need a larger lump sum, or a more conservative drawdown, to bridge that gap.

Possibly – it depends on your own numbers rather than a rule of thumb. Modelling your actual spending, housing costs and any other income sources against your super balance is the only way to know for sure, and it’s exactly the kind of question a financial planner can help you stress-test.

here's no magic number for how much you'll need in retirement, it's different for everyone. While you might have heard you need $1 million in super or more, the reality is you could need a lot less depending on your situation. For most people, having around 70% of their current take-home pay is enough to keep the lifestyle they have now.5  This can be a useful starting point, but the right amount for you will depend on your goals, spending habits and retirement plans. If you'd like help working out what that number looks like for you, a financial planner can help tailor an estimate to your personal circumstances.

Where to next?

How SASS deferred members can get the most out of My Retirement Planner > 

Changes to super caps and how to make contributions tax effective > 

AI and retirement calculators: what SASS members need to know > 

Ask an expert > 

Market review and outlook > 

Back to Edition 25 > 

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Next steps for deferred members

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1 Australian Bureau of Statistics, CPI rose 3.8% in the year to January 2026

2 Department of Health, Disability and Ageing, PHI Circular 12/26 – rebate adjustment factor effective 1 April 2026

3 Department of Health, Disability and Ageing, PBS co-payments

4 Association of Superannuation Funds of Australia, Retirement Standard, March 2026

5 Source: Superguide 2025

General advice only. Consider your objectives, financial situation or needs, which have not been accounted for in this information and read the relevant PDS and TMD before deciding to acquire, or continue to hold, any financial product. Advice provided by Aware Financial Services Australia Limited (ABN 86 003 742 756, AFSL 238430), wholly owned by Aware Super. You should read the Financial Services Guide, before deciding about our financial planning services. Issued by Aware Super Pty Ltd (ABN 11 118 202 672, AFSL 293340), trustee of Aware Super (ABN 53 226 460 365)