Planning for retirement can feel overwhelming. This is especially true when trying to figure out if your current savings and contributions will be enough to support you throughout your retirement years. A retirement planning calculator helps you take control by giving a clear estimate of how your savings could grow over time and whether they will cover your expected expenses. Using simple math, you can estimate your financial readiness for retirement and make informed decisions about saving and spending.
** Please note, this is an estimate only and does not replace professional financial advice. It’s important to consult a qualified financial adviser to create a personalised retirement plan tailored to your unique needs and circumstances.
What is a Retirement Planning Calculator?
A retirement calculator is a tool, or in this case a simple method, that helps forecast whether your current savings, combined with future super contributions, employer contributions, and other investments, will meet your retirement goals. It takes into account factors such as:
- How long you have until your planned retirement age
- How much your retirement savings might grow each year (the expected investment return)
- How much income you will likely need once you retire and stop working
Why Is a Retirement Planning Calculator Important?
Many people underestimate how much money they’ll need in retirement, especially when considering inflation rate, income tax, and potential pension benefits such as the government age pension or lifetime pension. Using a retirement calculator gives you a clearer picture of your future income streams, including passive income and social security benefits, so you can adjust your savings, delay retirement, or plan your spending to ensure peace of mind.
Using a retirement planning calculator turns a complex financial education topic into a manageable process, making your retirement goals more achievable and allowing you to track your progress over time.
Retirement planning calculators also encourage regular review and adjustment as your financial situation changes due to career breaks, wage inflation, or changes in your super balance. Starting early and reviewing often means you’re less likely to face unpleasant surprises related to your retirement income or super fund performance later in life.
Below is a step-by-step process you can use to estimate what your future retirement savings requirements might be. Further in the article we’ve linked to several other trusted calculators which may also assist you in making projections based on default assumptions or your own financial data.
If you need help planning your retirement, we also offer tailored retirement planning financial advice from qualified advisers.
How to Estimate Your Future Retirement Savings
Step 1: Calculate Years Until Retirement
Subtract your current age from the age you want to retire.
Example: If you are 45 now and want to retire at 65, you have 20 years left to save.
For more detailed information on Age Pension eligibility and to check your own status, you can use the official Services Australia Age Pension Eligibility Checker:
Step 2: Estimate How Much Your Savings Will Grow
Financial advisers use this formula to estimate your future savings:
Future Savings = Current Savings × (1 + Return Rate)^Years + Annual Contribution × [((1 + Return Rate)^Years − 1) ÷ Return Rate]
- Current Savings = money you have now
- Return Rate = average yearly growth rate (for example, 0.05 for 5%)
- Years = years until retirement
- Annual Contribution = money you add to savings each year
In simplest terms, your savings grow in two ways: the money you already have increases each year by the return rate, and the money you add regularly also grows over time.
Example:
If you currently have $100,000 saved and plan to add $10,000 every year for 20 years, with an average yearly return of about 5%, your total savings could grow to around $595,000 by retirement. This total includes the growth of your initial savings plus the contributions you make each year, both earning returns over time.
You don’t need to calculate this yourself—online calculators can do the math—but understanding this helps you see how your savings and contributions work together to grow before retirement.
How Do I Find My Personal Return Rate?
If you’re unsure about the return rate, note that your personal return rate is the average yearly growth of your investments. You can find it by checking your superannuation or investment statements, which show how your money has grown over time. If you’re unsure, ask your financial adviser or super fund—they can help you understand your returns based on where your money is invested.
For more information, visit the Australian Securities and Investments Commission’s guide on Understanding Your Superannuation.
Step 3: Calculate How Much You’ll Need for Retirement
Think about how much money you’ll need each year in retirement. Because prices usually go up over time, you should adjust your current yearly expenses for inflation, which is often around 2–3% per year.
To estimate what your expenses will be when you retire, multiply your current annual expenses by (1 plus the inflation rate) raised to the number of years until you retire.
Then, multiply that amount by how many years you expect to live after retiring.
Example:
- Current Expenses = $50,000 per year
- Inflation Rate = 3% (0.03)
- Years Until Retirement = 20
- Years in Retirement = 20
Calculation:
$50,000 × (1.03)^20 = $90,305 (estimated expenses in the first year of retirement)
$90,305 × 20 = $1,806,100 total amount you might need to cover your expenses throughout retirement
If your estimated savings (from Step 2) are close to or more than this amount, you’re likely on track. If not, you may want to save more, consider retiring later, or plan to reduce expenses during retirement.
Remember, this is a rough estimate to help you understand your retirement readiness. For a detailed and personalised plan, it’s best to speak with a retirement financial adviser.
More Retirement Calculators and Resources
If you want to explore further or try interactive tools, here are some trusted Australian retirement calculators and helpful guides to assist you in planning your retirement:
MoneySmart Retirement Planner
https://moneysmart.gov.au/retirement-income/retirement-planner
AMP Retirement Calculator
https://www.amp.com.au/retirement-calculator
Australian Securities and Investments Commission (ASIC) Superannuation Guide
https://moneysmart.gov.au/superannuation
Services Australia Age Pension Information
https://www.servicesaustralia.gov.au/who-can-get-age-pension
Frequently Asked Questions About Retirement Calculators
At what age should I start planning for retirement?
While it’s true that starting to save in your 20s or 30s can make retirement easier, it’s never too late to plan — especially if you’re in your 50s, 60s, or even early 70s. Many people begin focusing seriously on their retirement finances once they reach their 40s or 50s, as retirement starts to feel more real.
If you’re closer to retirement age, the good news is that there are practical steps you can still take to improve your situation, such as reviewing your superannuation, adjusting your investment mix, increasing contributions if possible, or considering part-time work after retirement. The most important thing is to take control now and seek personalised advice to make the most of the time you have.
How often should I update my retirement plan?
Review your plan regularly—at least once a year. Also check it after big life changes such as:
- Changing jobs
- Getting married or divorced
- Receiving an inheritance
- Keeping your plan current ensures it fits your needs.
What if I don’t know some of the numbers to enter into a calculator?
It’s okay to estimate. Use recent payslips, bank statements, and bills to make your best guess. You can refine these numbers over time. If uncertain about things like return rates or inflation, lean towards conservative estimates to avoid overconfidence.
Are online retirement calculators reliable?
They’re a good place to start but not foolproof. Calculators depend on your inputs and assumptions and can’t predict life’s surprises or market swings. Always combine calculator results with personalised advice from a qualified financial planner.
Can inflation rates change?
Definitely. Inflation fluctuates year-to-year and can impact your retirement expenses significantly. In Australia, inflation usually averages around 2–3%, but unexpected spikes or dips happen. It’s important to revisit your plan regularly to keep pace with these changes.
Should I rely only on a calculator for retirement planning?
No, calculators give estimates but can’t cover everything. A comprehensive retirement plan considers your entire financial situation, health, lifestyle goals, and risks. It also includes tax planning and optimising your superannuation. Working with a financial adviser ensures your plan is personalised and adaptable.