Financial Health Check Before Retirement: Are You Ready to Stop Working?
Planning to retire soon? Use this financial health check to assess whether your super, savings, and income streams are enough to fund a comfortable Australian retirement.
How much super do you actually need to retire comfortably?
The question of whether you have enough super to retire is the single most important financial calculation you will ever make, and the answer depends on the lifestyle you want and how long you expect to live. The Association of Superannuation Funds of Australia publishes the ASFA Retirement Standard, which benchmarks the annual cost of a comfortable retirement at approximately $51,000 per year for a single person and $72,000 per year for a couple, assuming you own your home outright. To fund a comfortable retirement for 25 years (from age 67 to 92), ASFA estimates you need approximately $690,000 in super as a single person or $690,000 as a couple. These figures assume you will also receive a full or part Age Pension, which currently pays up to $28,514 per year for a single person or $42,988 for a couple. If your super balance is well above $690,000, you may not qualify for the full Age Pension, but your super income stream should more than compensate. A modest retirement — covering essentials but with limited discretionary spending — requires significantly less, approximately $32,000 per year for a single person, achievable with a much smaller super balance supplemented by the Age Pension. The median super balance at retirement (age 60 to 64) is approximately $210,000 for men and $170,000 for women, well below the comfortable retirement threshold. This means many Australians will rely heavily on the Age Pension. Use our Money Check tool to see where your current balance sits relative to these benchmarks and our Retirement Calculator to project your balance at your intended retirement age.
Beyond super: other income streams in retirement
Superannuation is important, but it is not the only source of retirement income, and a comprehensive financial health check should assess all your income streams. The Age Pension is available from age 67 and is means-tested based on both your income and assets. For a homeowner couple, the asset threshold for a full pension is approximately $451,500 (excluding the family home), and the pension cuts out entirely at around $1,012,500 in assets. Understanding where you sit relative to these thresholds is critical for planning, as it determines how much pension income you can expect to supplement your super. Investment property rental income can provide a steady income stream in retirement, though you need to account for ongoing costs including rates, insurance, maintenance, property management fees, and periods of vacancy. Many retirees gradually sell investment properties to simplify their finances and reduce management burden as they age. Share portfolios and managed funds can provide dividend income, with Australian shares typically yielding 3% to 5% per year in dividends plus the benefit of franking credits that reduce or eliminate tax on those dividends. An investment portfolio of $300,000 in Australian shares might generate $12,000 to $15,000 per year in dividend income. Annuities offer guaranteed income for a fixed period or for life, providing certainty that super drawdowns cannot. Account-based pensions from your super fund allow you to draw a regular income while the remaining balance stays invested. The minimum drawdown rate increases with age — 4% at age under 65, rising to 14% at age 95 and over. Model all your income sources together using our Retirement Calculator to see whether your combined income will support your desired lifestyle.
The housing question: owning your home changes everything
Whether you own your home outright by retirement is arguably the single biggest factor in retirement financial security. The ASFA Retirement Standard assumes home ownership, and renters need significantly more savings to achieve the same lifestyle. A retiree renting at $400 per week in a capital city faces an additional $20,800 per year in housing costs compared to an outright homeowner. Over a 25-year retirement, that is $520,000 in rent — money that must come from super or savings. If you are approaching retirement with a mortgage, your financial health check should prioritise assessing whether you can pay it off before you stop working. Making extra repayments in your final working years, using some of your super to discharge the mortgage at retirement, or downsizing to a less expensive property are all strategies worth considering. The government's downsizer contribution scheme allows people aged 55 and over to contribute up to $300,000 each ($600,000 for a couple) from the sale of their home into super, regardless of other contribution caps. This can be a powerful way to convert home equity into retirement income while moving to a smaller, more manageable property. If you are renting and will continue to rent in retirement, you need to factor housing costs into your retirement budget and ensure your super and other income streams can cover rent increases over a potentially 25 to 30 year retirement. Commonwealth Rent Assistance provides some support for eligible retirees on the Age Pension, but it is modest — currently up to approximately $188 per fortnight for a single person. Use our Budget Planner to model your expected retirement expenses with and without housing costs to understand how much income you truly need.
Healthcare costs in retirement: what Medicare does and does not cover
Healthcare is one of the fastest-growing expense categories in retirement, and underestimating it can derail even a well-funded retirement plan. Medicare covers most doctor visits, public hospital treatment, and subsidised medications through the Pharmaceutical Benefits Scheme. However, it does not cover dental care, most optical services, physiotherapy, psychology, podiatry, or elective surgery wait times. Private health insurance in retirement costs approximately $3,000 to $6,000 per year for a comprehensive policy for a couple, and premiums increase every year — often by more than inflation. Many retirees face the difficult decision of whether to maintain private cover as they age and premiums rise. Dropping hospital cover saves money but means joining public waiting lists for elective procedures, which can stretch to months or years for joint replacements, cataracts, and other age-related procedures. Out-of-pocket medical expenses for retirees average $3,000 to $8,000 per year even with Medicare and private health insurance, rising significantly in later years when chronic conditions become more common. Dental care alone can cost $1,000 to $5,000 per year depending on the treatment needed. Aged care is the elephant in the room — residential aged care can cost $300,000 to $500,000 or more over several years, with fees including a basic daily fee, a means-tested care fee, and potentially a refundable accommodation deposit of $300,000 to $1,000,000. While government subsidies exist, the gap can be substantial. A thorough retirement health check should include reviewing your private health insurance, estimating out-of-pocket medical costs, and considering whether you have a buffer for potential aged care needs. Our Retirement Calculator factors in healthcare cost inflation to give you a more realistic picture of your total retirement needs.
Your pre-retirement financial checklist
If you are within five to ten years of your planned retirement date, this checklist will help ensure you are on track. Super balance — is your super on track to reach at least $690,000 by your retirement date for a comfortable retirement? If not, consider maximising concessional contributions ($30,000 per year) and catching up unused caps from previous years. Our Retirement Calculator can project your balance based on current contributions and returns. Debt elimination — will your mortgage be fully paid off by retirement? If not, create an aggressive repayment plan or consider whether downsizing could accelerate payoff and boost your super through the downsizer contribution. Eliminate all consumer debt including credit cards and personal loans. Income planning — have you mapped all your retirement income sources including super pension, Age Pension eligibility, investment income, rental income, and any part-time work? Do these income streams together meet or exceed your estimated annual expenses? Age Pension — check your eligibility by reviewing the income and asset tests on the Services Australia website. Even a part pension provides valuable income and access to the Pensioner Concession Card, which offers discounts on utilities, transport, and medications. Estate planning — is your will up to date? Have you appointed an enduring power of attorney and an advance care directive? Are your super fund death benefit nominations current and binding? Insurance review — consider whether you still need income protection and life insurance as you approach retirement, or whether the premiums can be redirected to savings. Many policies become prohibitively expensive after age 60. Use our Money Check tool for an overall financial health assessment, and consult the Retirement Calculator for detailed projections. If you are still working and want to confirm your entitlements, check with FairWork Mate. If your income has dropped, use BenefitsMate to see whether you qualify for any government assistance.
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General information and estimates only — not financial, tax, or legal advice. Always verify with a licensed adviser or the ATO.
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