This project was created to provide some guidelines and forecasts for the following questions:

  • How much do I need to retire?
  • How much will inflation or interest rates affect my retirement portfolio, both before and during retirement?
  • How much do I need in my superannuation / investment portfolio today in order for a comfortable retirement in the future?

Retirement Expenses

The Association of Superannuation Funds of Australia Limited (ASFA) is the largest policy, research and advocacy body for the Australian superannuation (pension) industry; a non-profit advisor to the Australian government.

ASFA have published a “retirement standard” of living expenses that lists how much money the average Australian individual or couple spends each year in retirement. Their latest figures are based on previous 2018 research data (subsequently adjusted for inflation each quarter).

Superannuation Investments

Given the multi-decade history, the S&P 500 Index data suggests high confidence using a baseline stock market performance of 11% with some uncertainty or risk that stocks can go up or down for several years at a time. Many superannuation ‘growth’ funds significantly underperform this simple baseline.

Any superannuation ‘growth’ fund that does not at least match the S&P 500 returns should be considered a terrible poor performance, and extremely mis-managed.

Why invest in superannuation fund managers that cannot outperform a monkey that simply ‘dollar cost average’ into the S&P 500 baseline?

Retirement Lifestyles

The ASFA “comfortable” retirement should be used as minimum baseline. Its reasonably “good” but is not luxurious.

The “modest” retirement is a borderline survival level, with basic and limited expenses, cheap old car, and a “need to keep close watch on utility costs and make sacrifices”.

I extended the model with additional levels factored at 200%, 300% and 500% of the “modest” lifestyle.

Couple Modest Comfortable Four Star Luxury Opulent
Annual $50,000 $75,000 $100,000 $150,000 $250,000
Monthly $4,166 $6,250 $8,333 $12,500 $20,833
Diff 100% 150% 200% 300% 500%

“Luxury” lifestyle could include for example, economy upgrade to business class, the “opulent” lifestyle is first class.

The models assume you own your own home so take any additional mortgage expenses into account.