How much money do I need to retire?

AS THE population ages an increasing topic for discussion is how much you need to retire. However, as this email from a reader shows it can be a difficult calculation.

"In determining how much is required to retire, you often suggest that 12 - 15 times the annual income needed would be appropriate.

This would mean that to achieve an income of say $60,000 pa. you might need 15 times this in superannuation i.e. $900,000.

However many advisors now suggest that you would need between 21 and 25 times the income you hope to have which would mean a superannuation balance of maybe up to $1.5M when inflation of 3% and a return of say 5% is assumed. Can you please elaborate."

The email highlights the problems with projected figures.

They are certainly useful when planning your retirement strategies but it must be understood that the purpose of projected figures is really to set goals. 

How much you need to retire will depend on a range of variables that includes how long you live, the state of your health, how long your parents live, what care they will need, how much you expect to receive in bequests, and your risk profile. 

For example, an extremely conservative investor would need a larger portfolio more than a more adventurous one because in theory, at least, the latter should get higher returns.

This is why it is critical that anybody retired, or contemplating retirement, have a meeting with their adviser at least annually to make sure they are on track, and to adjust their strategies when necessary.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email:

Topics:  noel whittaker opinion retirement superannuation

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