Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 218

Big data reveals how retirees really live

The superannuation industry isn’t quite sure what a comfortable retirement is, even as it desperately works to help members achieve that elusive goal.

It’s no surprise given the complexity of the task, which is affected by lifespan, personal expectations, government legislation, savings rates, market performance and more.

Many different opinions

But the problem is that members are likely to become disengaged and lose trust when they read conflicting articles about how much they need to save such as:

  • A couple will need about $640,000 in super savings to have a comfortable retirement.
  • A couple that saves at least $1 million in super will only generate about two-thirds of their pre-retirement income.
  • A couple needs about $1.5 million in super to generate an income equivalent to average weekly earnings.
  • A professional couple will need about $2 million in super at retirement.

These numbers stand in stark contrast to the median super balance at retirement (for those aged 60 to 64 years of age) of just $100,000 for men and $28,000 for women. Whatever estimate is chosen for a comfortable retirement, it’s out of touch for at least half the population.

The current crop of widely-ranging estimates also leaves much to be desired for wealthier Australians. Super accounts for just a small component of net household wealth according to the Productivity Commission and wealthier people tend to have more assets outside of super. It’s just not possible for super funds to estimate the level of super their members require when they don’t know the level of non-super assets they have and how they’re being used.

The amounts many Australians actually spend

Milliman’s quarterly Retirement Expectations and Spending Profiles (ESP) provide that type of information by analysing 300,000-plus retirees’ spending data.

The Retirement ESP shows that Australians aged 65 to 69 spend a median of just $31,068 (from all sources including super, non-super savings and government benefits) each year. To fund this expenditure with 75% certainty would require a superannuation balance of approximately $130,000 invested in a balanced fund. This also includes the substantial contribution of the age pension (set at a maximum of $20,745 a year, the maximum basic rate for a single excluding supplements), which funds a major portion of retirement income.

This isn’t to say that $130,000 should be a goal. It shows that even small differences in savings can have a hugely positive impact on members’ actual retirement lifestyles. This is the basis for true engagement.

More detailed market segmentation also reveals the behaviour of retirees by wealth bands, age, singles versus couples, location, as well as showing their essential versus discretionary spending and how it changes through retirement.

Retirement and Expectations Spending Profiles

This type of quality data is crucial given most people will not seek personal financial advice. However, data is just one component of delivering a personalised retirement experience. A combination of data and analysis can provide a sophisticated profile that can ultimately underpin and deliver the right products to the right members at the right time.

Each member must ultimately define their own comfortable retirement but it’s only by understanding their reality that super funds can help them achieve it.

 

Wade Matterson is a Principal, Senior Consultant, and leader of Milliman’s Australian Financial Risk Management practice and a fellow of the Institute of Actuaries of Australia. Read more about the Milliman Retirement ESP here. This article is general advice only as it does not take into account the objectives, financial situation or needs of any particular person.

 

  •   7 September 2017
  • 1
  •      
  •   

RELATED ARTICLES

What financial risks do retirees face?

Falling home ownership: the elephant in the super retirement room

20k now or 50k later? What’s driving decisions to withdraw super?

banner

Most viewed in recent weeks

The ultimate superannuation EOFY checklist 2026

Here is a checklist of 28 important issues you should address before June 30 to ensure your SMSF or other super fund is in order and that you are making the most of the strategies available.

Noel Whittaker’s take on the budget

Marketed as a fix for inequality and housing affordability, the latest budget instead delivers a tangle of tax changes that leave everyday Australians worse off.

Australia has no death duties. Technically.

Australia may not levy formal death duties, but a growing web of tax measures is quietly shaping what wealth passes between generations. Now, the 2026 budget adds another layer.

Lithium's rally is real this time – but no-one trusts it

The lithium rally mirrors the early-2010s tech stock surge, with demand set to double by 2030. Supply has been slow to respond, creating a market deficit for future tech like humanoid robotics and solid-state batteries.

Welcome to Firstlinks Edition 662 with weekend update

The debate over the budget is increasingly shaped by frustration and perceptions of unfairness, rather than clear-eyed assessment of policy outcomes.

Two months into retirement

A retirement researcher's take on retirement and her focus on each of her six resource buckets to stay engaged during the transition and beyond.

Latest Updates

Are the government’s CGT changes better for young investors?

New CGT rules promise fairness, but could young investors lose out? A practical scenario reveals how changes impact deposit goals, investment choices, and long-term wealth building for the next generation.

Retirement

How to minimise tax with a will

Inheritance tax implications in Australia may surprise some, as poor estate planning without proper wills or trusts can lead to costly tax bills and delays for beneficiaries.

Investment strategies

AI can’t pick winning funds, but it can help you avoid losers

Machine learning has been touted a game changer investment management. But a new study overturns claims that AI can generate positive alpha in mutual funds. Here are some practical takeaways for investors.

Investment strategies

Inflation BIG picture: Boomers got lucky, next Gen not so much

A 150-year view shows inflation's upward bias, driven by shifting monetary regimes and war stocks. This marks an end to the low-inflation boom that enriched boomers and ushers in a higher-inflation era for younger investors.

Planning

Tax deductibility of financial advice improves affordability

A shrinking adviser workforce and rising costs are squeezing access to financial advice, just as demand surges. Expanded tax deductibility offers a modest but meaningful boost to affordability.

Retirement

Retirement in reality – 3 months in

A reflection on travel mishaps, smart decision-making, time pressures and rebuilding health habits. Three months in, here's how to navigate the surprising realities of life after work.

Taxation

Calculating the business cost of Australia’s new 'productivity tax'

Amid a national productivity crisis, new economic analysis finds the tax changes in the 2026 Federal Budget create Australia’s first-ever by design 'Productivity Tax', where young people will pay the biggest price.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.