Only if a couple wants to be in the top 30 per cent of retirees, able to spend $80,000 a year, would they need to retire with a super balance a bit over $1,000,000.

Do these more honest estimates strike you as too low? That’s probably because people of working age tend to overestimate how much they’ll need in retirement. Coates lists the many savings you make after you retire.

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For a start, you don’t have work-related expenses. And retirees have more time to do things for themselves. Don’t forget that most people retire on some combination of super and the age pension. Remember too that, rightly or wrongly (wrongly in my book), the aged pay much less tax on their income than workers do. This makes a big difference to how much you need to live on.

Pensioners get discounts on council rates, electricity, medicines and public transport, and other benefits. These can add up to thousands of dollars a year. And whatever income you need at the start of your retirement, it typically falls as you get older. Coates says retirees tend to spend 15 to 20 per cent less when they’re 90 than they did when they were 70.

I don’t know if you’ve noticed in your own parents – I certainly did in mine – that oldies reach a point where they could afford to go out and spend money (another overseas trip, for instance) but they don’t feel like it. It surprises many that it’s common for oldies to save part of their income, simply because they didn’t have a reason to spend it.

Of course, deteriorating health stops people from spending. But most health and aged care costs are picked up by the taxpayer.

All this says people don’t need to spend as much as you may think in retirement. But everything I’ve said comes with a big proviso: that retirees own their own home. It’s been true for many decades that the great majority of retirees own their homes outright. That’s still true, though less so. These days it’s more common for people to retire still owing money on their mortgage. In coming decades, however, it won’t still be true that most retirees own their homes.

Meanwhile, I’m definitely not saying that people who have to rent in retirement have it easy. Far from it. But when you’re a home owner in retirement your spending on housing is far lower than for people still servicing a mortgage or renting.

The Retirement Income Review conducted in 2020 for the Morrison government judged that anyone with retirement income equivalent to between 65 and 75 per cent of their pre-retirement income would be able to live comfortably. It also found that, by this standard, most retirees will be doing fine.

But that was when compulsory employer contributions to super stood at 9.5 per cent of your wage. By now they’re 11.5 per cent and will rise to 12 per cent in July.

That’s why I say that those retiring in coming years won’t just be comfortable, they’ll be rolling in it.

Ross Gittins is the economics editor.

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