How much does one need to retire in Australia? There’s no mortgage, no work-related costs and fewer child costs…But then there’s greater travel, more frequent outings, and inevitable ageing costs.
So, what is the average retirement income in Australia?
What Is the Average Retirement Income in Australia
The average retirement income in Australia is based on two factors: the type of lifestyle you lead and whether you are single or a couple.
A scrimping single person is going to spend less than a carefree couple.
But, what’s the average?
There is actually no data available that tells us what the average Australian lives on each year.
Due to superannuation pensions and lump sums from age 60 not needing to be recorded on tax returns, there is no formal record of the exact amounts that retirees draw down from their super. Furthermore, there is no way of ascertaining whether such withdrawals are completely spent, or partly accumulating in bank accounts.
However, while we do not necessarily know the average retirement income of an Australian, we do know the amount of retirement income needed to fund a retirement lifestyle.
Research conducted by the Association of Superannuation Funds of Australia details various retirement expenditure breakdowns.
The breakdown retirement expenditure for singles and couples can be used to calculate what an average retirement income might look like in 2023.
Average Retirement Income for Singles
The average retirement income for single people in Australia, based on the retirement expenditure breakdown is approximately $32,000 per year for a modest lifestyle and $50,000 per year for a comfortable lifestyle.
Average Retirement Income for Married Couples
The average household retirement income for a married couple, based on the retirement expenditure breakdown, is approximately $46,000 per year for a modest lifestyle and $71,000 per year for a comfortable lifestyle.
|Expenses per year
A modest lifestyle is defined as having an income slightly above the Age Pension rates; whereas a comfortable lifestyle allows for more travel, higher quality health cover and occasional restaurant meals.
The retirement income amounts, above, assume that you own your home outright.
These figures are likely to be more representative of how much retirees really live on in Australia, as opposed to an average retirement income, because an average includes outliers, such as the ultra-wealthy. A median retirement income would be more relevant than the average but, again, there is insufficient data to calculate the median.
Where Does Retirement Income Come From?
Retirement income comes from a range of sources including Centrelink Age Pension payments, superannuation account-based pension income, personal investments, rental income and even annuities.
Here are some figures from the Australian Bureau of Statistics:
- The most common form of income stream for retirees remains the Age Pension. Specifically 53% of retired men aged 45 and over and 46% of retired women receive Age Pension payments.
- There has been an increase in superannuation pensions as a source of income; however this increase relates predominately to males. Specifically, 35% of men aged 45 and over and 29% of women 45 and over receive superannuation pensions.
Despite the Age Pension and superannuation income streams being the main sources of retirement income streams, there are several retirement income withdrawal strategies that can be used to cover retirement expenses.
Retirement Income Withdrawal Strategies
There are a number of retirement income withdrawal strategies available to you, including:
- Transition to Retirement Pension – limited access to your super in the form of an income stream, while you are still working. Learn More.
- Account-Based Pension Income Stream – complete access to your super once you have met the superannuation definition of retirement, including tax-free investment earnings. Learn More.
- Annuity Income Streams – A guaranteed income stream for life based on your age, the lump sum investment amount and agreed upon interest rate. Learn More.
- Bucket Strategy for Retirement – The deliberate structure of investments to ensure expenses can be met with cash-based investments, without needing to sell growth-oriented investments in unfavourable market conditions. Learn More.
Our financial planning firm, Toro Wealth, specialises solely in helping 50 to 70 year-olds optimise their financial position in the lead up to retirement. If you’re interested in learning more about our service and cost, click here.
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