Using a withdrawal-rate method, you can estimate a target portfolio size. Then model your path with the retirement calculator.
Estimate it with Retirement| Rule | Portfolio needed |
|---|---|
| 4% withdrawal rule (standard) | ~$1,000,000 |
| 3% withdrawal rule (conservative) | ~$1,333,000 |
| 5% withdrawal rule (aggressive) | ~$800,000 |
| Starting age (retiring at 65) | Monthly investment needed at 7% |
|---|---|
| Age 25 (40 years) | ~$381/month |
| Age 30 (35 years) | ~$555/month |
| Age 35 (30 years) | ~$820/month |
| Age 40 (25 years) | ~$1,234/month |
| Age 45 (20 years) | ~$1,920/month |
Retiring on $40,000 a year requires a portfolio of around $1,000,000 using the standard 4% withdrawal rule — meaning you withdraw 4% of your portfolio annually, which history suggests a balanced portfolio can sustain indefinitely. For Australians, $40,000 a year is a modest but liveable retirement income, especially when combined with a paid off home and potential Age Pension entitlements. The earlier you start the easier it gets — starting at 25 requires just $381 a month, while waiting until 45 means needing $1,920 a month to reach the same goal. Use the retirement calculator above to model your own timeline.
A simple method is: target portfolio = yearly income ÷ withdrawal rate.
Example: $40,000 ÷ 0.04 = $1,000,000 (before tax/fees).
Use these as rough starting points, not guarantees.
For Australians, $40,000 a year is close to the ASFA "modest" retirement standard for a couple and the "comfortable" standard for a single person with a paid-off home. The full Age Pension (currently around $28,000 for singles, $42,000 for couples) means many Australians only need their investment portfolio to generate the gap between the pension and their spending target. If you expect a partial Age Pension, the required portfolio can be significantly lower than the $1,000,000 shown here. Your superannuation balance at retirement also forms a major part of the equation — the $1,000,000 target is for your total investable assets, including super. Tools like Sharesight help track your total portfolio performance against your retirement target. If you're weighing up how much to direct into super versus a personal brokerage account along the way, see our ETF vs superannuation comparison.
This is a simplified number. In practice you’d plan around after-tax spending and account types.
It’s a guideline, not a guarantee. Try 3–4% to see a conservative range.
If you expect guaranteed income later, your portfolio may not need to cover the full amount.
Yes — lower the income goal and compare targets.
Increase contributions, reduce spending, extend timeline, and keep fees low where possible.