The average couple planning to rely on their superannuation for their entire retirement, or 30 years, will need $812,000, newly released Vanguard modelling has shown. This number, based on the Association of Superannuation Funds of Australia (ASFA) comfortable retirement standard, assumes an annual fee of 0.50 per cent for asset management and possible advice services.

Once that shifts to 1 per cent, retirees need $894,000 for a 95 per cent chance that they won’t run out of super within 30 years. Bump that up to 1.5 per cent and a retiree couple will need $980,000.

“The point here is that in the accumulation piece cost is important,” Vanguard head of corporate affairs Robin Bowerman said, marking the release of the Roadmap to Retirement report.

“But in the drawdown piece, particularly in the low-return drawdown market, cost is really, really important. Twenty to 50 basis points are going to make a significant difference over 20 years when you're in a low-return environment.”

The researchers noted that fees charged by superannuation funds can differ greatly, with retail funds reaching 200 basis points (2 per cent).

21st century retirement a ‘mathematical problem that’s pretty hard to solve’

The report also noted how retirement is harder than it has been historically, thanks to extended lifespans and shifting markets.

“We have a tendency to glorify the past and think of it as better than it was. In the case of people retiring 20-30 years ago, they may have actually had it easier than retirees do today,” Vanguard senior strategist and research co-author Nathan Zahm said.

He explained that returns these days are a lot lower than retirees would have historically received, and more risk needs to be taken to achieve the same returns.

“For that 50-50, equity-bond portfolio, which is a pretty typical retiree asset allocation, 4-5 per cent return for the next 10 years is our expectation,” Mr Zahm said.

“It wasn't that long ago that you could have had that same return in term deposits, so not only are returns lower, you actually have to take more risk to get the same return that you might have been used to historically so this creates a challenge.”

Combined with longer lives, “you've got a mathematical problem that's actually pretty hard to solve”.

Vanguard said that’s where planning comes in. According to the report, there are four broad themes in the retirement framework: determining goals, understanding the risks, assess resources, and developing a plan.

“A myriad of challenging decisions and trade-offs stand between a retiree and a financially secure retirement, and knowing where to start can be overwhelming,” Mr Zahm said.

“There’s no universal route to financial security in retirement, but there are common steps in the journey and this collection of resources empowers retirees through their own journey, which should lead to greater confidence in their ability to meet retirement goals.”