How much is enough

Why is it so hard to calculate your “Enough” number?

If retirement is around the corner for you, it’s likely you’re trying to figure out what your “Enough” number needs to be.

It’s an important number to know. I will help determine how long you need to work and when you can financially retire.

You need to know this sooner, rather than later if you want the confidence to not only retire but more importantly to spend your money in retirement.

After all, if you don’t have “Enough”, how will you pay for all your adventures in your retirement years.

Here’s the thing, you are either at risk of outliving your money or your money outliving you.

I’m sure you don’t want to live in poverty in your retirement years.

So many people we speak to think this is a simple calculation and that’s all they need. I’m afraid to say this is only the start.

Your “Enough” calculation has many inputs and outputs. It’s a complex equation which requires some real thought and analysis.

Before we get into the many inputs and outputs, it’s important to understand some common ways to calculate your number…

Common retirement calculations

  • 4% rule – a popular calculation first published by Bill Bengen in 1994.

The 4% rule has been widely used by financial advisers worldwide for some time. This suggests retirees can safely withdraw 4% a year adjusted for inflation over a 30 year period.

Bill suggests if you withdraw a regular 4% from your investments each year you wouldn’t have to worry about running out of money.

For example, if you have $1 million dollars invested, you could confidently take $40,000 per year from your investments.

But this rule is blind to the new realities of modern retirement. That is, you’ll likely spend more in your go-go years (first 10-15 years) and your income requirements will taper off as you age.

Therefore you need to be planning for varying your income through the different phases of retirement.

Following the 4% rule, may leave you short of experiences early on in your retirement. This will lead to regret in your later years.

The rule itself at the time was based on high returns being generated from investment markets. If long term returns are lower in the future than the past, this number will need to be higher than 4%.

  • Percentage of salary – Save enough to replace 70% to 90% of your salary.

For example, if your income was $100,000, you’d need between $70,000 and $90,000 pa in retirement. Then multiply this number by 10 to 12 times.

Once again this calculation works on the basis of withdrawing a set amount from your super or investments each year.

Both calculations neglect the variability in spending in retirement. This would suggest they are not appropriate for calculating your “Enough” number for the modern retirement.

A better and more accurate way of calculating your “Enough” number requires a deeper analysis of the many inputs and outputs. In other words sophisticated cashflow planning.

Not only will it give you a more accurate picture, it’ll also help identify blindspots in your current plan. It helps you plan with more clarity and certainty.

Let’s discuss the various inputs and outputs which will affect your final “Enough” number.


If you don’t have good health, it’s unlikely you’ll be able to embark on the many experiences retirees plan for. Which means you probably won’t need much. On the flip side if you are healthy and fit, it’s likely you’ll need a reasonable sum to finance all your activities and experiences in your retirement years.

Your health is probably one of the most important components driving your “Enough” number. If you don’t have your health and you are not very fit, it’s going to be hard to enjoy the many leisure activities many retirees indulge in.

A client of mine, aged in her early 60’s at the time, had more than enough money. She had plans of travelling the world and indulging in some hobbies. However, there was something holding her back.

For years she’d been looking after her aging parents at the expense of her own lifestyle. To be honest, she could have carved out time to pursue her interest in travel and hobbies.

But it was always, someday. Someday I’ll do them. Both her parents passed away and this was going to be her time. Sadly, she suffered a number of medical conditions which prevented her from pursuing her interest in travel and hobbies.

The reality is we never know how long we will have our health. For some this will impact the timing of their retirement along with when they do most of their active pursuits.

However, if you have good health, it’s likely you could enjoy a long active retirement lasting 20-30 years or more.


Health and longevity could probably go side by side. How long you live in retirement will impact how much money you will need to fund your life.

The only thing is, no one knows when they will die…

It would make my job a little easier knowing this. We could plan down to the dollar when to spend it all.

Many will go to a calculator on their super website and pluck in their numbers. The only problem with this is many use life expectancy factors which are historic. This may not give you the accurate picture you need.

Medical advancements have certainly helped with longevity. Provided you have good health at the age of 65. It’s likely your retirement will last some 20-30 years and in some cases longer.

The research tells us that at least one in the couple has a high probability of making well into their 90’s.

This means you need to have enough financial assets to see the last surviving partner out.

Unless you have health issues, you’ll need to plan on at least a 30 year or more retirement timeframe. That’s a long time to ensure your money lasts.

You could use a life expectancy tool such as Optimum Pensions Lifespan Calculator if you wanted a more accurate picture on how long you might live.

Three Spending Phases Of Retirement

Retirement can be broken down into the following three spending phases:

  • Go-Go Years

These will be your most active years and for many will be the time you spend the most. This period is your early part of retirement, the first 10-15 years (typically up to approx age 75).

This is the time you’ll travel to exotic destinations around the world. Perhaps hook up the caravan and travel around Australia. Pursue hobbies and interests you never had time for while working. You’ll probably socialise the most over this period of retirement.

It’ll be the most expensive part of retirement. It’s important you take this into account when running your numbers. You don’t want to get to the end of your life and look back with a chunk of money in the bank thinking, “I could have done more”.

Likewise, you don’t want to be irresponsible and blow it all in your active years and live in poverty for the rest of your life.

  • Slow-Go Years

A time in your life where you start feeling the aches and pains (approx age 75-85). Your hips go. Your knees go. Your body’s just not what it used to be.

It’s harder to walk the cobble roads in Europe. Spending 24 hrs on a plane is not as attractive as it used to be. Let’s not talk about the cost of travel insurance at this age. Hoping in and out of your caravan becomes more taxing.

It’s the time your spending starts to reduce as you life revolves more around your local community.

  • No-Go Years

These are the years your calendar is dictated by doctor appointments. It’s more important to be comfortable and secure. Spending really starts to slow as it’s just the basics you need.

And then, for you, you’re dead. That’s it for you…

There are three distinct spending periods through your retirement which require a little thought and planning.

It’s critical to understand the financial resources you have available to you, what will come into your retirement bucket and what’s going out at each phase.

This is the only way you can truly understand whether you will have “Enough“. It’s where sophisticated cashflow planning shines through. Like a GPS for your retirement.

Putting a spotlight on how things could potentially pan out financially for you. Helping you make confident decisions about how you allocate your money to live the best life you can in your retirement years.

This can give you the peace of mind you need along with more clarity, confidence and control over your retirement decisions.

You may want to watch, “Understanding Your Retirement Bucket” here…

Investment Returns & Inflation

The rate of return you receive on your investments will impact your “Enough” number significantly. Get this wrong and you run the risk of running out of money and living in poverty.

Quite simply the higher the investment return you use or could achieve, the less amount of money you will need. Conversely, the lower the investment return, the more money you will require to fund your retirement income.

Many think they can continue in the same manner they have their whole entire working life. Continue with the same investment strategy…

However, that poses some very real risks. Firstly, accepting a higher level of risk and therefore achieving higher returns could be devastating for your retirement.

Why, quite simply, if you have $1m invested and the share market drops 40%, your investment will drop to $600k. Now you need to draw the same level of income by selling down your investments. Realising losses that will never be recouped…

Many get this aspect wrong. We are hardwired to accumulate money through our working life. The financial services companies pump out a ton of marketing to encourage you to take risks and maximise your returns.

This is all great while you have your income to rely on. But in retirement, you need to take a different approach.

We work with clients in terms of what is the minimal dose of return to achieve the outcome of a client’s retirement funds lasting through retirement. Without putting them at risk of running out of money.

More often than not, it leads to client’s taking less risk, not more risk.

Then there’s the cost of living pressures, inflation. You don’t want to underestimate your inflation rate. You need to have a plan to combat inflation.

You may want to watch, “How Optimising Returns In Retirement May See You Risk Running Out Of Money” here…

Centrelink Pension

Over 60% of retirees will at some stage receive an age pension in their retirement years. The standard retirement calculations do not take this into account.

It could have a significant impact on the amount of money you will need to fund your retirement income.

Lifetime Income Streams

While I didn’t want to make this about products (they are tools in the tool bag), as this is the last thing we consider for clients.

It’s something many will need to consider as part of their retirement strategy. If you have between $400k and approx $1.5m, this is something which may provide you with more income in retirement.

The government over the last year has introduced a number of enhancements to the retirement space. This has led to a number of product providers innovating new products which could increase the level of income you receive in retirement.

In simple terms, they reduce the level of assets assessed for Centrelink by approx 40%. This in most cases will give access to Centrelink much earlier, if not more age pension. In the modelling I’ve compiled for a number of clients, the financial benefits have been substantial.

The downside, some of your money is not accessible except for the yearly income you receive for life.

This may impact your “Enough” number given retirement is all about the income you receive yearly to fund your lifestyle.

Slide note…the earlier you are in these types of structures the better the benefit. They initially act like a standard super fund until you reach age 65. At this stage you need to make a decision how much you want to transfer to a Lifetime Income Stream.


Do you plan to downsize at some point in retirement?

Outside of super, the family home is generally the biggest if not the second biggest asset many have. There’s a significant amount of capital tied up in the family home.

For most when the kids fly the nest, they no longer need the big house.

For some, using some of their equity in their home will release funds to add to their nest egg to fund their retirement income.

Taking this into account, for a fair number of people it will impact their “Enough” number.

This list is not everything, but covers the main components in determining your number. As you can see it is a complex equation that can’t be determined via a simple calculator.

But what are you really solving for in your retirement years?

Solving For Total Life Enjoyment

Time is a finite resource. The reality is we don’t know how much time we have.

Think about it, what does a rich life look like to you?

The game you are playing one of total life enjoyment.

Yes, part of that involves getting your numbers right…

But what’s more important is to experience all the things you dream off while creating memories. While you are fit and able to. They are going to be the things you’re going to remember in your later years.

A life well lived is one lived through your values, what’s most important to you.

Your money is your capital and should be used to generate as many memory dividends as possible.

When we work with clients, yes, there’s the financial component. However, most of our time is spent helping clients create plans to maximise life enjoyment and accumulate as many memory dividends as possible.

It’s how you solve the trade-offs between money, health and time over your finite human life.

You need a framework to methodically think through your decisions so you achieve total life enjoyment. Minus the noise and personal biases.

If you’re someone who is motivated to maximise memorable life experiences in your retirement years. It’s going to require analysis and planning to achieve. Sure knowing you’re “Enough” number is critical. But having a plan on how you’re going to get to retirement and ultimately extract the level of income you need so you don’t run out of money is just as critical.

If you’re ready to start building a plan for how you’ll achieve total life enjoyment.

If this is you, book your Retirement Clarity Call with Glenn by clicking here and we’ll discuss your current retirement challenges, provide some insights and roadmap for how you can maximise life experiences in retirement.

Don’t leave your retirement to chance…

Glenn Doherty – CFP – Financial Planner | Retirement Planning Specialist |Retirement Planning Made Simple for aspiring happy lappers and avid travellers within 7 years of retirement

We work with people in Adelaide and around Australia virtually via zoom!

Request a Retirement Clarity Call

An opportunity to talk through some of your challenges and questions you have around your retirement.

Achieve some clarity and maybe a roadmap on how you can achieve a comfortable retirement.

Schedule here

Advice Disclaimer: Any reference in this publication to the provision of advice refers to advice of a generic nature, and should not be taken as product or investment recommendations. Before any action is taken based on the information provided, independent financial advice from a licensed financial adviser should be sought. Financial Freedom Project Pty Ltd ATF GA & DC Doherty Family Trust Trading as Jigsaw Private Wealth is a Corporate Authorised Representative of Exelsuper Advice Pty Ltd. The information contained in this publication is of a factual nature only and is not intended to constitute financial product advice. Information is current as at date of publication. This is an online information blog. It does not imply an offering of securities.

Financial Planning Retirement Retirement Income Retirement Planning