Skip to content Not long ago, my wife and I were chatting about financial independence and early retirement, our own FIRE goals. I asked her:
“How much do you think we’d need per year to live comfortably once we retire?”
After some back and forth, we landed on a number: $80,000 a year, in today’s dollars. No mortgage. No more big-ticket expenses for kids. Our goal is a comfortable lifestyle that’s flexible and free. But naturally, the next question hit hard:
“How much do we need to save to make that happen?”
And more specifically, “How much needs to be inside Super, and how much outside?”
Step 1: Treating Super Like a Locked Up Long Term Account
Super is basically a forced long term savings account that you can’t touch until you hit 60 (at best). It is however an extremely tax friendly environment and will provide great tax benefits for those who contribute extra to it. So if I want $80,000 per year from age 60 onwards, I can reverse-engineer it using the classic 4% rule.
- $80,000 ÷ 0.04 = $2 million
That’s the ballpark I should be aiming for in my super by the time I’m 60. But will I realistically get there? I ran a rough Excel projection based on a few assumptions:
I work for another 20 years
I contribute $30,000 per year into Super (including employer + my own top-ups)
I assume a 5% annual real return (after inflation)
That gives me around $1.4 million at age 50. Letting it sit for another 7 years compounding quietly, it could grow close to $2 million by 60! Noting this projection is dependent on me topping up my super with approx. $10k extra per year to hit the concessional contribution cap.
Step 2: What About the 10 Years Before Super Access?
I’d love to stop full-time work by the time I reach 50–55., but super won’t be available till 60. So… what pays the bills between age 50 and 60?
Let’s assume I still need $80k per year for that phase. That’s $800,000 needed outside of super. Right now I’ve got around $135k in investments outside of super, to bridge that gap I roughly need to:
- Invest an extra $16,000 per year outside of super for the next 20 years.
- Add that to the $10k super top-up mentioned previously, we’re looking at $26,000 per year needed for investing in total.
Step 3: Is That Even Realistic?
I used one of my favourite lazy money rules: the 50/30/20 budgeting rule (50% needs / 30% wants / 20% investing).
Say the family’s after-tax income is $120,000. That means 20% going to investing is equal to $24,000. Push a little harder and I’m close to that $26k annual investment goal. It’s definitely tight but not impossible.
Final Thoughts
Everyone has a different definition of “enough.” That’s why FIRE isn’t a single number, it’s your number. But once you pick a figure that reflects the life you want, everything else becomes easier. It gives you clarity, a direction and something to build towards.
So if you haven’t already, try asking yourself this one simple question: “What kind of retirement do I actually want, and how much will it cost per year?”
Then go from there. Small goal, just get started and that’s how FIRE begins.
Thanks for reading. If you’re on your own journey to financial freedom in Australia and want real, on the ground opinions, please stick around. I share my own numbers, thoughts and lessons transparently here!
