How much do you need to retire – a case study

14 November 2019

Shaun Haden , Wealth Adviser |

We have previously written about how much you might need to fund the next stage of your life, which concluded that it largely comes down to how much you spend. In addition, the amount you need may be less than you think due to declining expenditure as we age.

To put this into context, let’s review a case study.

Peter is 60 years old and has recently retired. In order for Peter to maintain his standard of living, he requires an income of $150,000 per year and has a life expectancy of 84 years of age.

If we assume Peter continues to spend $150,000 every year until he reaches age 84, he may require a financial asset base of around $2,500,000.

However, if we assume Peter’s spending reduces by 10% every five years from age 65, his required financial asset base reduces to around $2,000,000. That means Peter could have been enjoying life a little more in the lead up to his retirement, rather than saving an extra $500,000.  

Speak to a BDO Private Wealth Adviser to get an understanding of how much you may need in order to retire and maintain your standard of living. You may be working harder or longer than you need to.


  • Capital is invested earning an average of 6% per year
  • Capital is split 50% between a tax-free pension and the other 50% in a personal investment portfolio
  • Spending is adjusted for inflation, being 2.5% per year
  • Eligibility for the Age Pension has been factored in

The rates of return and figures shown are illustrations only and are based on current taxation rates and assumed earnings and inflation rates. The figures are not guaranteed – the actual performance of the investments will depend upon economic and other conditions over the period.  Other conditions include investment performance, future taxation and legislative changes.


This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact the BDO member firms in Australia to discuss these matters in the context of your particular circumstances. BDO Australia Ltd and each BDO member firm in Australia, their partners and/or directors, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

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