Budgeting for Retirement
Retirement budgeting requires a balance between lifestyle goals and rising essential costs. A comfortable life now costs roughly $54,240 for singles and $76,505 for couples. Success depends on managing the "Go-Go, Slow-Go, No-Go" spending curve while protecting your assets against inflation and increasing healthcare demands.
Introduction
For many Australians, the transition to retirement is one of the biggest shifts in life, not just personally, but financially. As of February 2026, the economic landscape for retirees is defined by a new normal of higher living costs, shifting tax rules, and a complex aged care system.
Having a sufficient super balance is essential to budgeting, but equally important is understanding how your spending will evolve over twenty or thirty years. This guide breaks down the essential figures and strategies for an Australian retirement budget.
Costs of comfortable retirement
The Association of Superannuation Funds of Australia (ASFA) provides the figures for retirement budgeting. As of the latest 2026 updates, the figures required for a "comfortable" retirement—which includes private health insurance, a decent car, and regular holidays—have reached new highs due to persistent inflation in essential services like electricity and health.
| Lifestyle Standard | Single (Annual) | Couples (Annual) |
|---|---|---|
| Comfortable | $54,240 | $76,505 | Modest | $35,199 | $50,866 |
| Age Pension | ~$30,646 | ~$46,202 |
Figures assume you own your home outright. If you are renting, you should budget at least an additional $15,000–$20,000 per year.
Three phases of retirement spending
Never assume that your budget will remain static. Most retirees experience a spending curve often described as the "Go-Go, Slow-Go, and No-Go" years:
The Go-Go Years (Ages 60–75): This is often your most expensive period. You are active, traveling, and finally tackling the home renovations you delayed. Your budget should account for higher discretionary spending.
The Slow-Go Years (Ages 75–85): Travel usually scales back to domestic trips, and dining out becomes less frequent. However, maintenance costs, both for your home and your health, begin to climb.
The No-Go Years (Age 85+): Discretionary spending plummets, but healthcare and aged care support become the dominant budget line items.
Budget Killers
While food and transport are manageable, three specific areas are currently putting the most pressure on Australian retiree budgets:
Healthcare & Insurance
Healthcare is the fastest-growing expense for retirees. Even with the Pharmaceutical Benefits Scheme (PBS) cap falling to $25.00 for general patients in 2026, out-of-pocket costs for specialists, dental, and optical remain high. Budgeting for top-tier private health insurance is essential for most who want to avoid long public waitlists.
Utility Bills
Utility prices saw a spike in late 2025. While government rebates exist, retirees spend more time at home, leading to higher consumption. Council rates and levies (like the new Medicare Levy in some states) are also rising faster than the general CPI.
Aged Care Costs
New rules introduced in November 2025 have changed how we pay for help at home. Under the Support at Home program, self-funded retirees may now pay up to 80% of their everyday living costs and 50% of independence support costs, while full pensioners pay significantly less. Your long-term budget must include a buffer for these support services.
Smart Income Strategies
Find the sweet spot between drawing down your hard-earned savings and maximising the government benefits designed to support you throughout your retirement years.
4% Rule (Adjusted)
Historically, experts suggested withdrawing 4% of your super per year. In 2026, with higher volatility, many advisors suggest a flexible approach, i.e., drawing more when markets are up and tightening the belt when they are down.
Work Bonus
Remember that as of 2026, you can earn $300 per fortnight from working without it affecting your Age Pension. The Work Bonus is a great way to fund extras like a luxury holiday without dipping into your capital.
Concession Card Maximisation
Ensure you apply for the Commonwealth Seniors Health Card (CSHC) if you are self-funded. The income thresholds are generous, and the savings on medicines and utilities can add $2,000–$3,000 back into your budget annually.
Budgeting Tips
Moving from a broad financial strategy to day-to-day execution requires a shift in mindset. These tactical adjustments help bridge the gap between long-term wealth preservation and your immediate lifestyle needs.
Separate Your Buckets
Keep two years of cash in a high-interest savings account. Use your super for the growth portion. This prevents you from being forced to sell shares when the market is low just to pay your grocery bill.
Automate Your Payday
Set up your account-based pension to pay you fortnightly, mimicking a salary. This makes it much easier to stick to a budget than taking large lump sums.
10% Maintenance Rule
Budget 1% of your home's value annually for repairs. For a $1M home, that’s $10,000. If you don’t spend it this year, save it. The roof or the hot water system will eventually demand it.
Conclusion
Retirement budgeting is a balancing act between enjoying the fruits of your labour and protecting yourself against a rising cost of living. By using the ASFA Standards as a baseline and building in buffers for healthcare and aged care, you can move into your senior years with confidence. Book a complimentary 15-minute call with James Hayes to establish a retirement budget.
FAQs
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To achieve the ASFA comfortable standard, which includes private health insurance and regular travel, single homeowners generally need approximately $595,000 in super, while couples need $690,000. These figures assume you will also receive a part Age Pension to supplement your total annual income.
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This framework describes how retirement spending typically evolves. The "Go-Go" years (60–75) are high-spend due to travel and activity. Spending decreases in the "Slow-Go" years (75–85) as activity levels drop, before shifting toward healthcare and support in the "No-Go" years (85+).
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Yes. Unlike the Age Pension, the Commonwealth Seniors Health Card (CSHC) has no assets test. It is strictly based on an income test. As of February 2026, you can earn up to $101,105 (single) or $161,768 (couple) and still receive significant discounts on medicine and utilities.
Disclaimer
The information in this article is provided as a general guide only. It does not constitute personal financial advice and should not be relied upon as such. Readers should seek advice from a licensed financial adviser before making any financial decisions. James Hayes and his associated entities accept no responsibility or liability for any loss, damage, or action taken in reliance on the information contained in this article. Links to third-party websites are provided for reference purposes only. We do not endorse or guarantee the accuracy of their content.