How Should I Plan For The Retirement That I Want?
GENERAL ADVICE WARNING: This information is of a general nature only and neither represents nor is intended to be specific advice of any particular matter. Madison Financial Group Pty Ltd strongly suggests that no person should act specifically on the basis of the information contained herein but should seek appropriate professional advice based upon their own personal circumstances.
At Japhia, our clients aspire to own their own home, maintain a high quality lifestyle after they retire and if they deem appropriate, transfer part of their wealth to the next generation(s). To achieve these goals, our clients need to determine the retirement income that they need when they retire, and manage their superannuation balance, other investment assets and outstanding debt to target that retirement income.
How much income do I need to cover my retirement spending?
A commonly referenced benchmark for determining retirement spending in Australia comes from the Association of Superannuation Funds of Australia (ASFA) through what is known as the AFSA Retirement Standard which is updated every quarter. The Retirement Standard estimates the annual amount needed for a modest retirement and a comfortable retirement assuming the retiree retires at 67 and owns their home outright. As at the end of March 2026, AFSA estimates a single person needs at least $56,000 a year, and a couple needs at least $79,000 a year, to fund a comfortable lifestyle in retirement (Source: ASFA Retirement Standard).
The ASFA Retirement Standard figures are estimates based on generic assumptions which may not align with your personal circumstances. The majority of Japhia’s clients aspire to be able to afford more than this level of spending by the time they retire. Generally speaking, a retiree would rely on their super, income from their non-super assets and, if eligible, the Age Pension to fund their post retirement debt obligations and lifestyle. Since the Age Pension is subject to means testing based on income and assets (see https://www.servicesaustralia.gov.au), it tends to be less relevant to Japhia’s typical client who is more affluent. In fact, our goal is to help you manage your super and non-super assets so that you do not have to rely on the Age Pension. However, if you are entitled to a full or part Age Pension then we will factor that into your retirement planning strategy.
How do I calculate my retirement spending?
Your retirement spending amount should reflect the actual lifestyle you want, not a generic retiree profile. Refer to the categories of spending in the ASFA Retirement Standard as a guide, e.g. insurance, car and home maintenance, utilities, dining out, clothing and personal care, holiday and leisure activities, etc. Consider how many years you expect the level of spending to continue and how it may fluctuate over time (e.g. repay outstanding debt as soon as possible, higher holiday cost during the early stage of retirement and higher healthcare cost during the later stage of retirement). Factor in the age you plan to retire and life expectancy and be mindful of the impact of inflation.
What advice should I get?
Knowing how much you need to retire is only useful if it connects to a strategy for getting you there. If your current super balance and non-super assets are on track to meet your retirement goals, the priority becomes growing and protecting those assets through appropriate investment risk management and having adequate insurance to preserve your ability to continue accumulating those assets. If there is a gap between what you have in super and what you desire, options include increasing super contributions, reviewing how your super and non-super assets are invested, or adjusting your expected retirement age. Japhia’s advice on investments, superannuation and insurance will help you with these decisions.
In terms of superannuation more specifically, it has for many years been an effective way to accumulate assets to fund retirement, given features such as lower tax rates on income and capital gains and the potential to use limited recourse loans to acquire certain assets. However, laws and regulations affecting super can and do change over time, and we have seen such changes made to items such as contribution caps, ability to access to super balances and permissible investments. Our clients seek our guidance because super typically represents a substantial portion of their assets and simply cannot be ignored. The decision to have or not to have a self managed superannuation fund is also one that will benefit from getting professional advice to evaluate the pros and cons. Optimising the timing and amount of tax effective super contributions is another area where Japhia can add value for you.
In summary, the earlier you review your super arrangement the more time and options you have to maximise the benefits you can obtain from your super through different stages in your life.
Talk to Someone About Your Retirement strategy
If you want to know exactly where you stand, talk to Japhia Wealth Advisory. We will work through your numbers and tell you honestly whether you are on track.
DISCLAIMER: The figures in this article are applicable as of the relevant specified date and may not be the most recently available data. Japhia Wealth Advisory Pty Ltd is not required to update this data or to ensure its currency and accuracy so readers should conduct their own research to ascertain the most recent figures before relying on them.