Finding your real retirement number

Sitting across from our clients, there’s one question that comes up more than just about every other: “How much do I need to retire?”

Without systematically working through the retirement planning process prior, this deceptively simple enquiry raises more questions than answers. That ‘magic number’, the sum that opens your door to retirement, can’t be plucked straight from benchmark guides or inspired by someone else’s targets. To pinpoint that figure, we need to first understand what retirement looks like to you in the day-to-day, month-to-month, year-to-year.

When we first start that conversation, most of our high income clients will tell us they envision a ‘comfortable’ retirement for themselves. But the reality is what constitutes comfortable varies significantly from one person to the next.

According to ASFA, a comfortable retirement covers all the general living expenses and allows for a good standard of living through the purchase of things like: regular leisure activities, occasional restaurant meals, modest wardrobe updates, annual domestic trips, and one overseas trip every seven years. Going by ASFA’s standards, a comfortable retirement for a couple is $73,000 pa in retirement income. Most of our clients need to live on a much higher income than this. Based on my clients, I would say retirement income ranges anywhere from $100,000 pa to $1M pa. The point is that the ‘right’ figure must be determined by your individual lifestyle.

There is a myth that people spend based on how much they have in the pot. That’s not what we see. We have clients with $20million in financial assets who live on $100,000 per year in retirement. And on the flipside, we have clients with $5million in assets who live on $200,000 per year in retirement. Spending habits are not directly tied to the size of your retirement savings. They’re driven by your personal attitudes, environment, and priorities.

And this is why retirement planning isn’t just an exercise in crunching the numbers. As financial advisers, once we have the numbers, it’s easy for us to tell you whether you’re financially equipped to retire or not. The equations, the projections—those are the least complicated parts of retirement planning. The hard part is getting to those numbers, because it requires being honest about what retirement really looks like for you. That’s a real challenge for a lot of people because until you’re living it, retirement is a big unknown.

To bring that distant stage of life into clearer focus, we devote much of the pre-retirement runway to working through the big questions. Through these ongoing discussions, we’re able to sharpen the picture of life after work and clarify the actual figures you need to see you through retirement.

These are some of the key questions that help us understand how you’ll spend your time and money in retirement:

1. What does your social group spend their time doing?
Your peer group sets an unspoken baseline. If your friends like to take their motorhomes or caravans up the coast each winter, you’ll probably want a set‑up of your own. If they prefer six weeks in Europe every year, that carries a very different price tag. We ask about your circle because lifestyle costs rarely occur in isolation—you tend to keep pace with the people you spend time with.

2. Do you plan to provide financial support to adult children or grandchildren?
In the lead‑up to retirement, we circle this question again and again. Many clients insist they won’t be helping family financially, only to revise that view later, whether it’s by way of covering aged care costs for parents, school fees for grandchildren, or regular gifts to adult children.

Regular gifting alone can be significant. I recently pointed out to one couple that they had given away more than $2 million to adult children over the past decade—something they hadn’t tallied until we ran the numbers.

Priorities shift over time, but by considering these possibilities early, we can build any planned or potential support into your retirement strategy, rather than scrambling to fund it later.

3. How much investment risk are you willing to take?
Your answer matters because it determines how vulnerable your portfolio is to the order in which market returns arrive. In retirement, a run of poor years early on can shorten the life of your capital dramatically, while the same dips during your working years make almost no difference.

We use a simulator to show how your asset pool, income target and risk tolerance play out over time. Seeing the projections helps you decide whether to dial risk up or down, spend less, work a little longer, or if the numbers look sound, spend with confidence.

4. How might your spending change over time?
A common criticism of the ASFA benchmarks is that they assume costs rise with wages after retirement. Earlier this year, Brendan Coates of the Grattan Institute argued the opposite, suggesting retiree spending falls by 15–20% between ages 70 and 90.⁴ Our experience says otherwise.

Many people believe they will spend heavily early on and far less in their 80s. In reality, the mix of costs changes, but the total rarely drops. Extra time in the first decade often means more travel, new hobbies, and additional outings. Later, leisure spending may slow, but other expenses, such as healthcare, aged care, or financial assistance for family members tend to rise. So while you may spend on different things, overall outgoings typically creep higher over the course of retirement.

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Answering these four often‑overlooked questions adds depth to your retirement plan, but facts and figures alone won’t carry you across the finish line.

Our regular discussions in the five years or so before retirement cover the numbers in detail and help clients start thinking about life after work. Still, even with the finances sorted, a successful retirement hinges on being mentally ready for the change.

I spoke with a client recently who was due to retire in four years. They’d been offered a chance to sell their business with a lease‑back, but the lease was only for three years. Their first instinct was to say no: they wanted to work four more years, not three. Although the deal was later reshaped, that reaction told me something important. After years of planning, retirement still didn’t feel real. For most, the psychological leap is the final and toughest step in turning intention into achievement.

The encouraging part is that once the reality of retirement does click, momentum builds quickly. The moment clients can picture life after work—where they’ll be, what they’ll do—the confidence follows. As financial advisers, there’s nothing more fulfilling than seeing our clients enjoy the retirement they’ve earned over a lifetime of hard work.

Ready to explore what your retirement could look like? Get in touch with Ulton Wealth to start mapping the runway to your retirement.

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