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Book a FREE consultation
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Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

Let’s Look at How Much Do I Need to Retire on $100,000 a Year?

A happy couple retiring on $100,000 a year
Retirement Planning Successful retirement planning requires your investments to last your entire life after-work, which requires a long term and well thought out structure for you to achieve this.

Determining how much you need to retire, is the starting point of a successful retirement, and the fact you already know how much income you want, means you are off to a great start. Here at Yield, we have helped 100’s of people to retire securely and our clients often ask: How much do I need to retire on $100 000 a year? Or how much to retire in Australia? To work this out, there are several factors that depend on your individual circumstances and in this blog, we break down the key factors to figure this out.

Key Consideration for How Much Do I Need to Retire on $100,000 a Year in Australia.

1. Desired Retirement Lifestyle

So, I know you have nominated $100,000 as a comfortable retirement income, but how have you come to this? If you have put some science around it and are clear that it is the income that will meet your needs and wants, now and throughout your life, then you can probably skip this section, however if you are still a little unclear then read on.

Determining your desired retirement lifestyle refers to the kind of life you want to live after you retire. It’s one of the most important factors to consider when calculating how much you’ll need to save for retirement.  Do you see yourself relaxing on the beach, traveling the world, or leaving a legacy? The more you want to do in retirement, the more you’ll need to save up for it. So, to ensure a comfortable retirement, it’s important to start thinking of the type of life you want to live in your retirement.

To see how $100 000 a year compares to the average Australian currently, we can refer to the latest data from ASFA for guidance. It suggests that a modest lifestyle for couples aged 65-84 entails annual budget of $46,620.05 and $32,417.48 for singles per year. Meanwhile, if you’re looking for a comfortable lifestyle, you still looking at around $71,723.56 for a couple and $50,981.27 for singles per year.

 

Average income Australia and living standards for those aged 65 to 84 based on ASFA data

Remember, these figures are just averages that can be considered benchmarks. Your retirement income objective will be shaped by your individual lifestyle preferences and circumstances, so $100,000 may well be the figure for you. When we speak to clients about their income needs, we start with how they envisage their best life to look, and if we identify that it is achievable, then this is obviously the ideal situation. When the numbers don’t quite stack up however, we look for acceptable compromise, so the best of your retirement ambition is achieved. For example, you may prioritise a budget for more travel in the earlier years of retirement and be prepared to take a lower income in later years. How you approach your retirement income planning, should be highly personalised to what you desire and where there are compromises, make them with a clear picture of your options. So, take a moment to consider the kind of retirement lifestyle you envision and seek personalised advice from retirement experts who can help tailor a plan to your specific goals.

2. Your Desired Retirement Age and Life Expectancy

When it comes to life expectancy, predicting exact figures can be tricky. However, according to the Australian Bureau of Statistics, men’s life expectancy is 81, and women can expect to live to 85. These figures are just a starting point however, as they change depending on the age you intend to retire. Furthermore, if you are in a financially dependent relationship, then it is important to consider life expectancy of the younger. Naturally it figures, that the longer you expect to live, the more money you’ll need to cover your expenses. At Yield, we run our figures to age 90, to create some flexibility and we will vary our calculation if needed from there. By factoring in life expectancy, you can ensure your nest egg stretches far enough to cover your golden years.

 

Average Life Expectancy in Australia by Retirement Age

3. Age Pension

The Age Pension is not intended to be your sole source of income, but it can act as a valuable safety net within your overall retirement plan. To qualify, you must meet certain age and residence criteria, and pass income and asset tests.  Understanding these requirements can help you determine if and how much you might receive. Factoring in Age Pension entitlements to your retirement income calculation is essential for most retirees. To illustrate this, approximately 70% of Australian retiree’s today, receive at least a partial age pension. Even considering that your retirement income objective is $100,000 p.a., it is conceivable that in later life, as your investment balance diminishes, you could be eligible to age pension. Indeed, in our estimates further in this blog, Centrelink entitlement amounts to $384,596, if you draw your financial investments right down. To get a comprehensive understanding of the Age Pension, including eligibility requirements and potential benefit amounts, you can read our latest blog: Can I Get the Age Pension.

Potential Centrelink benefits to retire on $100,000 a year

4. Current and Future Expenses

Examining your spending habits today creates a baseline for how much extra needs to be saved. Don’t forget to consider things like inflation, healthcare costs, and the possibility of downsizing your living arrangements down the road. By keeping track of your spending, researching future expenses, and giving yourself some financial leeway, you’ll be better prepared to reach your goal of retiring comfortably on $100 000 a year. Some straight-line assumptions can be used for variables like inflation. But planning for events like downsizing can make a meaningful difference to what is possible.

5. Debt Levels

Carrying debt into retirement can significantly impact your finances. High monthly payments can strain your budget and limit your spendings and can distort how much income you think you need in retirement. Ideally, paying off high-interest debts can free up more of your income for the things that really matter to you. By taking proactive steps to manage and reduce debt both before and during retirement, you can better position yourself to achieve your financial goals and enjoy a comfortable retirement on $100,000 a year.

6. Super Balance

Your super balance serves as a primary income source during retirement. This determines your income in retirement, affecting how you withdraw money, the performance of your investments, and how long your savings will last. When you’re planning to retire on $100,000 a year, it’s essential to keep a close watch on your super savings to ensure they can support your desired lifestyle throughout your retirement years. Superannuation for retirees is often tax free and it is a purpose-built structure for retirement. So, it often makes sense to look at strategies to grow your super before retirement, to make your retirement money stretch further.

Let’s Talk Numbers: Reaching Your $100 000 Goal

The following graph provides a guide of the lump sum required today for a couple aged 67 to 90 to retire comfortably on $100,000 a year. It assumes investments are in superannuation and converted to pension, where investment earnings would be tax free, as well as withdrawals. Furthermore, there is a calculation including and excluding Centrelink benefits for reference. With the inclusion of Centrelink benefits, the required lump sum is significantly lower due to the additional income support. These figures should give you a solid grasp of what is needed in your retirement savings to keep up a $100,000 yearly income.

However, it’s important to remember that these figures include a range of assumptions and may not reflect your unique circumstances. Therefore, when you’re planning for retirement and wondering, how much do I need to retire on $100,000 a year? it’s crucial to factor in all relevant considerations. To personalise these calculations, you should seek guidance from a financial expert. With a retirement specialists help, they can guide you and tailor a retirement blueprint that fits your unique needs and situation.

Graph displays lump sum needed to retire on 100.000 a year for a couple aged 67-90

How Yield Can Help You?

At Yield, we are retirement experts and understand that planning for retirement is deeply a personal journey, and one that holds significant importance in each person’s life. We also know that planning for retirement can feel overwhelming with all the factors to consider. That’s why having a retirement expert by your side can truly make all the difference. With Yield, you’ll benefit from a comprehensive approach to retirement planning, tailored to your unique needs. Our team goes beyond numbers and will work closely with you, providing personalised insights and strategies to help you retire with confidence.

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Important Note
Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.

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Free Consultation

Free Consultation

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.