What Is A Very Good Retirement Income?

Retirement is a significant milestone, often viewed as a well-deserved opportunity to enjoy life without the daily grind of work. As you approach this new chapter, one of the most critical considerations is determining what constitutes a “very good” retirement income.

While the definition can vary widely based on personal circumstances, lifestyle expectations, and geographic location, understanding the general benchmarks and guidelines can help you plan effectively.

This article explores various factors and offers insights into what might be considered a very good retirement income, helping you to ensure a comfortable, secure, and fulfilling retirement.

What Is A Very Good Retirement Income?

Determining a “very good” retirement income depends on several factors, including lifestyle expectations, location, healthcare needs, and individual financial goals. However, a few general guidelines and benchmarks can help provide a framework for understanding what might constitute a very good retirement income:

Replacement Ratio

  • A common rule of thumb is that retirees should aim to replace about 70-80% of their pre-retirement income to maintain their standard of living. This percentage takes into account reduced expenses in retirement, such as commuting and retirement contributions, but also considers increased costs, such as healthcare.

Median Income Benchmarks

  • Moderate Lifestyle: For many retirees in the U.S., a moderate lifestyle might be sustained on an annual income of $40,000 to $50,000.
  • Comfortable Lifestyle: A more comfortable retirement might require around $70,000 to $100,000 annually.
  • Luxury Lifestyle: For a luxurious retirement, especially in high-cost areas, $100,000 to $150,000 or more per year may be necessary.

Savings and Investment Strategies

Using the 4% rule (a guideline suggesting that retirees can withdraw 4% of their retirement savings annually), the required nest egg can be estimated:

  • For $40,000 per year: $1,000,000 in savings.
  • For $80,000 per year: $2,000,000 in savings.
  • For $120,000 per year: $3,000,000 in savings.

Social Security and Pensions

  • For many retirees, Social Security benefits and pensions will be significant components of their retirement income. The average Social Security benefit in 2023 is about $1,827 per month, or roughly $21,924 per year, though higher earners may receive more. Combining this with personal savings and investments is key to achieving a very good retirement income.

Healthcare Costs

  • Healthcare can be a significant expense in retirement. It’s crucial to factor in Medicare premiums, supplemental insurance, and out-of-pocket costs, which can vary widely.

Cost of Living Variations

  • Where you live greatly impacts how far your retirement income will stretch. Living in a high-cost area like New York City or San Francisco will require a higher income compared to living in a lower-cost area like rural Texas or parts of the Midwest.

A very good retirement income is subjective and highly personalized. For some, $70,000 annually will provide a comfortable lifestyle, while others might require $150,000 or more. Planning, saving, and investing with these factors in mind will help ensure that your retirement income aligns with your desired lifestyle.

Consulting with a financial advisor can also provide personalized recommendations based on your specific circumstances and goals.

What Is The Average Income Self-Funded For Retirees?

In Australia, the average income self-funded retirees can vary widely based on their savings, investments, and lifestyle choices. While specific data on the exact average income for self-funded retirees in Australia can fluctuate year to year, several insights and estimates can provide a general understanding:

Sources of Income

  • Superannuation: Many retirees rely on their superannuation savings, which are accumulated throughout their working lives through mandatory contributions from employers and personal contributions.
  • Investments: Income from investments such as stocks, bonds, property, and managed funds.
  • Other Savings: Personal savings and potentially other sources like annuities or rental income.

Average Income Estimates

  • ASFA Estimates: According to the Association of Superannuation Funds of Australia (ASFA), as of their latest retirement standard benchmarks, retirees looking to achieve a comfortable standard of living (including some leisure activities and occasional international travel) would require around $44,011 per year for a single person and $62,137 for a couple (in 2021). These figures include income from all sources, not just self-funded resources.
  • Investment Income: Self-funded retirees often draw income from their investments, which can vary significantly based on market conditions and the size of their investment portfolios.

Superannuation Balances

  • The average superannuation balance at retirement can influence a retiree’s income. For instance, the average superannuation balance for men aged 60-64 in Australia was around $214,590, and for women in the same age group, it was about $142,291, as reported in the 2021-2022 Australian Bureau of Statistics (ABS) data.

Financial Planning and Advisement

  • Financial planning and advice play a crucial role in determining the income of self-funded retirees. Seeking advice from financial advisors helps retirees optimize their investment strategies and manage their assets effectively to generate income.

While exact figures can vary, self-funded retirees in Australia typically manage their retirement income through a combination of superannuation savings, investments, and other assets. Planning for retirement involves understanding these factors and ensuring that income sources align with desired lifestyle expectations.

How Many Retirees In Australia Are Self-Funded?

A significant portion of retirees in Australia are considered to be self-funded. According to the Australian Bureau of Statistics (ABS) and data from the Association of Superannuation Funds of Australia (ASFA), here are some key insights:

Retirement Income Sources

  • A large proportion of retirees in Australia rely on a combination of the Age Pension (a government pension) and their savings or superannuation (self-funded retirees).
  • The Age Pension is means-tested, meaning its availability and amount depend on the retiree’s assets and income.

The proportion of Self-Funded Retirees

  • Approximately 30-40% of retirees in Australia are considered to be self-funded retirees. This means they primarily rely on their savings, investments (including superannuation), and other assets to fund their retirement lifestyle.
  • The exact percentage can vary based on economic conditions, changes in superannuation policies, and demographic factors.

Superannuation Impact

  • The introduction of compulsory superannuation contributions (known as the Superannuation Guarantee) in 1992 has significantly increased retirement savings for many Australians. This has led to a growing number of retirees who are partially or fully self-funded through their accumulated superannuation balances.

Financial Independence

  • Being self-funded allows retirees greater financial independence and flexibility in managing their retirement income. It also places responsibility on them to ensure their savings and investments last throughout retirement.

Policy and Demographic Trends

  • Government policies, economic conditions, and demographic changes (such as increasing life expectancy and workforce participation rates) can influence the proportion of self-funded retirees over time.

While the exact number fluctuates and depends on various factors, a significant segment of retirees in Australia are self-funded, relying on their accumulated superannuation savings and other investments to support their retirement lifestyle. This trend underscores the importance of effective financial planning and management to ensure a secure and comfortable retirement.


Factors including personal superannuation savings, investments, and individual circumstances determine the average income for self-funded retirees in Australia. The exact amount that retirees rely on to fund their lifestyle in retirement can vary, but it typically comes from a mix of superannuation funds, investment returns, and maybe even personal savings or rental income.

If they want to maximize their income sources and be financially secure in retirement, retirees need financial planning and counsel. Retirees can benefit from the guidance of a financial advisor when making investment selections, risk management, and other educated choices that will help them maintain their desired standard of living in retirement.

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