Calculate how long your retirement savings will last at different withdrawal rates, and find the sustainable drawdown rate for your nest egg.
| Withdrawal rate | Lasts |
|---|
The "4% rule" (US research) suggests withdrawing 4% of your portfolio annually is sustainable for 30 years. Australian research suggests 3.5–4.5% may be more appropriate given different market conditions, franking credits, and Age Pension supplementation.
Single: $50,981/year | Couple: $72,663/year. Super funds are required to provide a retirement income strategy. Consider combining drawdown with the Age Pension for a more secure retirement income.
The most important variable in retirement income planning is your withdrawal rate — the percentage of your balance you draw each year. The 4% rule (originating from US research, widely applied in Australia) suggests that withdrawing 4% of your starting balance annually, with inflation adjustments, has historically sustained a 30-year retirement in most market conditions.
| Starting Balance | Annual Withdrawal | Withdrawal Rate | Estimated Duration (6% return, 3% CPI) |
|---|---|---|---|
| $600,000 | $24,000 (4%) | 4% | Indefinitely sustainable |
| $600,000 | $30,000 (5%) | 5% | ~35-40 years |
| $600,000 | $36,000 (6%) | 6% | ~25-28 years |
| $600,000 | $42,000 (7%) | 7% | ~18-22 years |
| $600,000 | $48,000 (8%) | 8% | ~15-17 years |
For account-based pensions (the most common retirement income product), the ATO mandates minimum annual drawdown amounts based on age. You must withdraw at least this much each year:
| Age | Minimum Drawdown % | On $600,000 Balance |
|---|---|---|
| Under 65 | 4% | $24,000/year minimum |
| 65–74 | 5% | $30,000/year minimum |
| 75–79 | 6% | $36,000/year minimum |
| 80–84 | 7% | $42,000/year minimum |
| 85–89 | 9% | $54,000/year minimum |
| 90+ | 11-14% | $66,000-$84,000/year |
What is the 4% rule for retirement withdrawals?
The 4% rule suggests withdrawing 4% of your starting retirement balance annually (adjusted for inflation each year) should sustain a 30-year retirement in most historical market scenarios. On a $600,000 balance: $24,000 in year 1, increased annually by CPI. At a 6% return with 3% CPI, this rate is mathematically sustainable indefinitely.
What is the minimum super drawdown in Australia?
Account-based pensions have mandated minimum annual drawdowns set by the ATO. Under age 65: 4% of balance. Ages 65-74: 5%. Ages 75-79: 6%. Ages 80-84: 7%. Ages 85-89: 9%. Ages 90-94: 11%. Age 95+: 14%. These minimums increase significantly with age, accelerating balance depletion in later retirement.
What happens to my super if I run out before I die?
If your account-based pension balance reaches zero, you rely entirely on the Age Pension (if eligible) and any other income sources. The maximum Age Pension is currently $1,200.90/fortnight for singles ($31,223/year) and $1,810.40/fortnight for couples ($47,070/year). This provides a meaningful safety net but well below the comfortable retirement standard.
Should I take a lump sum or income stream from my super?
Most financial advisers recommend an account-based income stream over a lump sum for most retirees because: earnings remain tax-free in pension phase, you preserve the capital for investment growth, and regular income helps budget management. Lump sums may be appropriate for specific large expenses like paying off a mortgage or purchasing an annuity.