How much money will I need to retire comfortably?

It’s the question I get asked most. “How much do I actually need to retire?”

Here’s the simple maths I use with clients. It gives you a real number in about a minute.

The short answer: about 20 times your yearly income

If your money earns a 5% income return in retirement, you need about 20 times the income you want each year.

• $100K a year ($8.3K a month): about $2M
• $150K a year ($12.5K a month): about $3M
• $200K a year ($16.7K a month): about $4M
• $300K a year ($25K a month): about $6M

These are rough guides, before any Age Pension, and not a forecast. Your number depends on your age, your spending and how your money is invested.

Most of my clients want $15K to $25K a month. That means somewhere between $3.6M and $6M, counting everything you own except your home.

Why 5%?

A diversified portfolio of shares, property and cash has historically earned more than 5% a year over the long term. Drawing about 5% gives you income now and room for your capital to keep growing with inflation.

It also lines up with super. From 65 to 74, the minimum you must draw from a super pension each year is 5% of the balance.

Draw much more than that in the early years and you risk running down your capital. Draw less and you may die with more than you needed.

Super does most of the work

From 60, income from a super pension is generally tax free. Earnings on that pension are tax free too.

Each person can move up to the transfer balance cap into a tax free pension. It’s currently $2M per person. So a couple can have up to $4M working tax free in retirement.

That’s why I push clients to build both partners’ super, not just one. 7 strategies to reduce tax and build wealth.

Count everything, not just super

• Super for both of you
• Shares and ETFs outside super
• Vested company shares and RSUs
• Investment property
• Cash and offset balances

Don’t count your home, unless you plan to sell it and downsize. You still have to live somewhere.

What changes your number

• Retiring earlier means more years to fund, so you need more.
• A mortgage in retirement means you need more income.
• Travel, helping the kids and health costs are often higher in the first 10 years.
• Inflation means $200K today will need to be much more in 20 years.

How to close the gap in 10 years

If your number is $4M and you have $1.5M today, the gap can feel huge. It usually isn’t, if you have 10 years and a plan.

At 7% a year, money doubles in about 10 years. That’s the rule of 72. Add regular contributions and the gap closes fast.

One client was 49 with $800K in super, combined with his partner. They put in $8,500 a month. 11 years later it’s $4M, enough for $200K a year, tax free. Read the case study.

The checklist I use is here: 7 financial things to do 10 years before retirement.

Who I do this for

My clients are tech executives and sales leaders, aged 40+, earning $400K+ with RSUs or big commissions. Most have at least $500K in super and $1M of equity in their home, and can save at least $4,000 a month above their minimum mortgage repayments.

If that’s you, I can model your exact number and the date you can stop working.