If you’re worried you might outlive your retirement savings, you’re not alone
Not having enough money saved for retirement and outliving your savings is one of the biggest financial worries for people worldwide.1 But planning and knowing you’re on track can provide a sense of confidence and peace of mind. Let’s look at what you have now, what you’ll need, and other sources of income you can draw on, including the government Age Pension.
What's covered in this guide:
Step 1: What do I have today?
To determine if you’re going to have enough in retirement, start by logging into your account. Check your super balance, review your investment options, and see if you have lost super.
Step 2: How much will I need for retirement?
How you live, particularly your financial and lifestyle choices, will determine how long your savings will last.
The following tools and tips can help you understand how much you’ll need to live in retirement.
Build a retirement budget
A detailed retirement budget could provide clarity around how much you will need to live on, how long your money will last, and whether you can afford the lifestyle you want.
Start by calculating your living costs and regular expenses. Use your current expenses as a guide, but remember, these may go up or down in retirement as your circumstances change.
How long will my money need to last?
Planning for your retirement years can be tricky because we can’t predict how long we’ll live. However, the government’s life expectancy tables can offer some helpful estimates. Based on the averages, Australians can expect to live 20 years or more in retirement.
If you’re 65 now, you might expect to live well into your 80s.1 So, budgeting for 20 years or more of retirement is a good place to start.
You can learn more about retirement standards and lifestyle choices here.
Retirement Calculator
Simulate your retirement income, and explore:
- the impact of making more/less contributions
- how/when the Government Age Pension could help
- when you might be able to retire and how long your savings could last
Step 3: Other ways to fund my retirement
Your super is likely to be a primary source of income during retirement, but it may not be the only one. For example, you may have investment assets outside of super, or you might be eligible for the Age Pension. You may even be able to turn your home into income. Let’s explore your options and how they could work for you.
Funding your retirement:
- Using your home to help fund retirement
- Can I return to work?
- Don’t forget the government Age Pension
- Investments outside of super
Using your home to help fund retirement
For many, our home is our biggest financial asset. If you own your home, there are a few ways you could consider using it to help fund your retirement lifestyle.
Downsizing
Selling your home and moving to a property that better suits your needs could leave you with money to spare, particularly if you’ve paid off the mortgage. If you’re aged 55 or over, and you’ve owned your home for more than 10 years, you may be able to use some of the proceeds of the sale to give your super a serious boost with up to $300,000 in a one-off downsizer contribution.
If you have a spouse, they may also contribute up to $300,000 to their super – bringing the potential contribution amount up to $600,000 per couple.
You can find more about downsizer contributions and eligibility criteria on the Australian Taxation Office (ATO) website.
Access equity in your home through a government loan
Prefer to stay put? You may be able to access the equity in your home through an Australian Government loan, available to eligible older Australians. You can choose to receive fortnightly payments to supplement your regular income or receive lump sum advance payments to help with unexpected expenses or fund one-off costs.
Find out more about the Commonwealth Home Equity Access Scheme eligibility criteria at the Department of Social Services.
Talk to a specialist
To learn more about your options, speak to one of our super specialists.
Can I return to work?
Many people return to work after retirement. If you’re thinking about working again, it’s worth understanding how it could affect your income, super, and any Age Pension you receive.
Don’t forget the government Age Pension
Many retirees rely on the government Age Pension – either as a primary source of income or as a welcome boost to help their super last longer.
To receive the government Age Pension, you need to be 67 years or older. You’ll also need to meet other criteria such as residency requirements, the income test and an assets test.
Even if you’re not eligible for the Age Pension on the day you retire, you may become eligible as you draw down your super balance.
Download our Age Pension fact sheets to learn more about eligibility and how to apply.
Are you eligible for the Age Pension?
To make the process easier, Mercer Super has partnered with the pension experts, Retirement Essentials, to help you easily check your Age Pension eligibility.
Investments outside of super
If you have investments outside of super, you can use them to adjust your retirement income expectations, and make the money go further.
Whether you're planning for retirement or already retired, we can put you in contact with the Mercer Financial Advice team who can consider other aspects of your financial situation to help you.
Explore more: it’s your time to thrive
How do I turn my super into income?
Your super doesn’t stop working when you do. You could set it up to pay you a regular income, take it as a lump sum, or use a mix of both.
Setting up a TTR strategy
Starting your retirement doesn’t have to be a hard line in the sand, there’s another option that allows you to ease into it. A Transition to Retirement (TTR) strategy can be a useful way to gradually ease out of the workforce at your own pace.
Working in retirement
Retirement doesn't always mean you stop working completely. In fact, many Australians are working longer than ever before, some because they want to, others because they need to.
1 The report from the World Economic Forum (2024) - Longevity Economy Principles: The Foundation for a Financially Resilient Future | World Economic Forum (weforum.org)
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