ASFA Retirement Standard — 2024 Benchmarks
The Association of Superannuation Funds of Australia (ASFA) publishes quarterly benchmarks for the cost of a comfortable and modest retirement, assuming retirees own their home outright.
| Lifestyle | Single (p.a.) | Couple (p.a.) |
|---|---|---|
| Comfortable — enables a broad range of leisure and recreation, good quality food, private health insurance, a reasonable car, clothing and household goods | $51,630 | $72,663 |
| Modest — covers essentials, basic leisure, limited travel, public transport and basic health | $34,470 | $47,387 |
Source: ASFA Retirement Standard, September Quarter 2024. These figures are updated quarterly and assume retirees are relatively healthy and own their own home. Amounts are in today's dollars and increase with CPI.
Understanding Your Retirement Projection
Retirement planning is about more than picking a number. It's about understanding the interplay between your lifestyle goals, investment strategy, inflation, taxation, and longevity risk — then building a plan that's robust across a range of outcomes.
🪣 The Bucket Strategy
A common retirement approach divides your wealth into three "buckets": Short-term (1–2 years) of cash and term deposits for immediate spending, providing peace of mind during volatile markets. Medium-term (3–7 years) in fixed interest and defensive assets, which refill the short-term bucket. Long-term (7+ years) in growth assets (shares, property) that drive portfolio longevity. This structure means you never need to sell growth assets during a downturn.
📉 Sequencing Risk
The order of investment returns matters enormously in retirement. A significant market downturn in your first few years — when your balance is at its peak — can permanently impair your portfolio's longevity, even if average long-term returns are strong. This is known as sequencing risk and is the primary reason this report includes a Year 1 stress test. Mitigating strategies include holding adequate cash reserves and maintaining a diversified asset allocation.
⏳ Longevity — Planning for a Long Life
Australians are living longer. A 65-year-old male today has a 1-in-4 chance of living to 92; for females it's 94. For couples, there's a roughly 50% chance at least one partner reaches 95. Planning to age 90 leaves a significant risk of outliving your money. We recommend planning to at least age 95, with a margin of safety.
💼 Super vs Non-Super — Tax Efficiency
Investment earnings within a superannuation pension account are tax-free — one of the most powerful tax concessions available. Earnings on investments held outside super are taxed at your marginal rate (with offsets for franking credits and CGT discounts). Drawing from super first generally preserves more wealth over time, though individual circumstances vary — particularly around Centrelink entitlements, estate planning, and access to the tax-free threshold on non-super income.
📊 Investment Returns & Inflation
This projection uses nominal returns before fees, with inflation modelled separately. In practice, returns vary significantly year to year. A "balanced" portfolio has historically averaged 7–8% p.a. over 20+ year periods, but with individual years ranging from -20% to +30%. The projections assume a constant return for simplicity — real-world outcomes will fluctuate around these figures.
Important Information & Disclaimer
This document has been prepared by Merit Financial Services as a discussion paper only and does not constitute personal financial advice. The projections contained herein are based on assumed rates of return, inflation, and taxation rates that may not reflect actual future outcomes. Past performance is not a reliable indicator of future performance.
The calculations assume a constant rate of return each year. In practice, actual returns will be volatile and may differ significantly from the assumptions used. The impact of investment fees, account-based pension minimum drawdown requirements, social security entitlements, and changes to tax or superannuation legislation have not been fully modelled.
This projection should be read in conjunction with, and does not replace, a comprehensive Statement of Advice (SoA) tailored to your personal circumstances, objectives, and financial situation. We strongly recommend discussing these projections with your financial adviser before making any financial decisions.
Tax rates used reflect the Australian Stage 3 personal income tax rates effective from 1 July 2024. ASFA Retirement Standard figures are as at September Quarter 2024 and are updated quarterly.