Annie works part-time as a teacher and earns $80,000 before tax.
Her take home (or after-tax) pay is about $63,000 a year - after paying $17,000 income tax and the Medicare levy. She is also paying off her apartment, with mortgage payments for the year at $15,000. Annie wants to pay off her mortgage before she retires, which she plans to do at 67.
Annie also calculates that her daily living expenses are likely to go down by about $4,000 a year when she retires, as she doesn’t need to take public transport to work, and her kids are likely to be living on their own, which will reduce her food and utility expenses. Taking all these factors into account, she estimates that she will only need about $44,000 a year in retirement to maintain her current lifestyle.
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| How much income Annie needs in retirement* |
Per year |
|---|
| Before-tax income |
$80,000 |
| Less income tax |
$17,000 |
| Less mortgage payments |
$15,000 |
| Less reduced expenses |
$4,000 |
| Income needed in retirement |
$44,000 |
* Based on 2024/2025 income tax rates.
Annie has a super balance of $220,000. This means Annie will be eligible for the Government Age Pension – about $30,000 per year when she retires. This means she’ll only need to withdraw $14,000 to fund her retirement income of $44,000.
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| Annie's income in retirement per year |
$44,000 |
| Less Government Age Pension |
$30,000 |
| Income Annie needs to withdraw from her super in the first year after retiring |
$14,000 |
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