War and money + How much you need to retire comfortably

Hi everyone,

Happy Friday, A good week for the Koch family as our Dubai-based daughter, son-in-law and four-year old granddaughter made it back home to Australia. Reminds me how lucky we are to live in this country.

On the financial front, all eyes are on the Middle East conflict and its impact on oil prices, global inflation and how long it could last.

Former Australian Treasurer and ambassador to the United States, Joe Hockey - now founder of consulting firm Bondi Partners - wrote a terrific analysis of the situation in his weekly newsletter this week:

Iran’s strategy is to prolong the conflict, by whatever means possible. The pressure on the US and Israel will build as:

• Allies like Saudi Arabia, UAE and others are dragged into the conflict.

• US casualties mount.

• American citizens grow tired of the cost and casualties.

But, most importantly, Iran is hitting multiple countries to ensure that the US missile defence system is stretched thin. It is already under pressure having previously supported Ukraine as well as Israel.

So Iran is being very strategic in hitting multiple countries, targeting their oil and gas infrastructure with the small ordinances its drones carry (don’t forget Iran borders 11 other countries including sea borders with Kuwait, Saudi Arabia, Bahrain, Qatar and the UAE). US allies all need missile and air defence support.

In the meantime, the US and Israel will say they will keep going harder and longer than anyone expects. Of course.

Iran wants to drag it out and the US and Israel want to end it quickly.

The conflict will have enormous implications for us all.

In this week’s newsletter:

• How much do you need to retire on?

• Pension, deeming rate and super contribution cap changes explained.

• Sydney and Melbourne property values start to wane.

• The housing supply pipeline gets a boost.

• Dopamine and debt: The brain science behind why we spend.

• Graph of the week: Aussies are living, and retiring, for longer.

How much you need to retire on?

I speak at a lot of retirement seminars and the most common question is, “How much do I need in my superannuation to fund a comfortable retirement?”

The answer is very individual because it depends on what sort of retirement lifestyle you choose. Everyone is different with different spending habits, hobbies and passions.

But as a benchmark I always refer to The Association of Superannuation Funds of Australia (ASFA) retirement budgets for a modest and a comfortable lifestyle.

ASFA has just updated its retirement benchmarks for the first time in three years. And the shift is significant.

For a comfortable retirement, one that covers a decent lifestyle, a reasonable car, private health insurance and a modest amount of travel, couples now need $730,000 in super at retirement, up from $690,000. For singles, that figure has risen to $630,000, up from $595,000.

If you’re planning on a more modest retirement, relying largely on the full age pension with very little discretionary spending, the benchmarks are lower but have also jumped. Couples need $120,000 in super (up from $100,000), and singles need $110,000 (also up from $100,000).

For couples who rent in retirement and want a modest standard of living, factoring in rent assistance and the full age pension, the retirement savings target is $385,000. For single renters, it’s $340,000.

A comfortable retirement now costs couples $77,375 a year and singles $54,840. A modest retirement costs couples $51,299 a year and singles $35,503. For renters on a modest budget, those annual figures rise to $67,639 for couples and $50,055 for singles.

Even the “comfortable” budget only includes one frugal international holiday every seven years. So if you’re dreaming of exploring the world in retirement, you’ll want to plan beyond the benchmark.

Pension and deeming rates change, as do contribution caps

The latest bi-annual age pension indexation increase starts on 20 March, while deeming rates are also changing for the second time since the pandemic.

Deeming is what Centrelink uses to calculate how much income it assumes your financial assets are generating - your savings, shares, term deposits and the like. It doesn’t matter what those assets are actually earning in investment markets. Centrelink “deems” them to be earning a set rate, and that deemed income is factored into your pension income test.

The lower deeming rate will rise to 1.25 per cent, applied to financial assets up to $64,200 for singles and $106,200 for couples. And the upper deeming rate will rise to 3.25 per cent, and be applied to financial assets above those thresholds.

If you’re receiving a part pension and have savings or investments, it’s worth checking whether this affects your entitlements, because higher deemed income can reduce how much pension you receive under the income test.

From July, there will also be three important changes to the amounts you can contribute to super. First, the concessional (pre-tax) contribution cap will rise from $30,000 to $32,500.

The non-concessional (after-tax) contribution cap will also increase, rising from $120,000 to $130,000. Finally, the three-year bring-forward cap will increase to $390,000.

These remain some of the key ways Australians can boost their super savings.

For people in their 50s and 60s, perhaps in peak earning years, selling an investment property, receiving an inheritance, or trying to make up for time lost earlier in life, these higher limits can make a big difference to what you’re able to get into super before you retire.

Sydney and Melbourne property price growth is waning

Two months into 2026 and Sydney and Melbourne property values are flatlining while the mid-sized capitals continue to record a solid rate of gain at more than 1 per cent month-on-month growth.

According to property research group Cotality, Perth is showing the strongest trend, with home values jumping 2.3 per cent in February, while Brisbane, Adelaide and Hobart have also recorded a rise of more than 1 per cent in February.

Sydney and Melbourne have been less resilient following the February rate hike and the drop in sentiment, with home values flat over the past month and down -0.1 per cent and -0.4 per cent over the rolling quarter.

While interest rate rises are having a big impact on Sydney and Melbourne, in the mid-sized capitals the bigger issue is a lack of properties on the market. In the four weeks to February 22, listings in Perth remained 48 per cent below their five-year average, with Brisbane 31 per cent below and Adelaide 23 per cent lower.

By contrast, advertised stock levels in Sydney and Melbourne are just 1 per cent and 4.3 per cent below their five-year averages, respectively. Both cities have also seen a clear pickup in the flow of new listings through February, with newly advertised stock 9.7 per cent above the five-year average in Sydney and almost 12 per cent higher than average in Melbourne.

It’s a sign the affordability issues are hitting.

Maybe the housing supply pipeline is improving?

The Australian Bureau of Statistics released its monthly building approvals data for detached houses and multi-units, showing that 9,900 detached houses were approved for construction in January - the strongest monthly result since September 2022.

The pickup in detached house approvals was driven by increases in New South Wales, Queensland and Western Australia.

Renovations have also been a strong segment of the market. In the 12 months to January 2026, council-approved renovation work increased by 5.4 per cent to $1.265 billion.

But, multi-unit approvals decreased by 21 per cent in January to 4,670, driven by monthly declines in multi-unit approvals across all states, except for Western Australia.

Thankfully, the poor result in January masks the upwards trend in multi-unit approvals over the past 12 months, which have increased by 21 per cent to 79,130.

In seasonally adjusted terms, Western Australia saw the largest increase in detached house approvals in January, rising 12.8 per cent. This was followed by Queensland (+2.9 per cent) and New South Wales (+1.2 per cent). South Australia recorded a 6.9 per cent monthly decline, while Victoria fell 4.6 per cent over the same period.

Dopamine and debt: The brain science behind why we spend

The rush you feel when clicking “buy now” or tapping to pay isn’t just excitement - it’s chemistry.

A hormone and neurotransmitter called dopamine is released, rewarding us with a little hit of happy... it’s like a gold star for achievement.

“Well done, good job,” it whispers as we walk out of the store, shopping bags swinging.

But here’s the catch: we also experience this same buzz even when spending money we don’t have.

So, when the credit card statement lands, what was once dopamine is now debt.

Here’s why understanding how our brains react to spending can save you money and help you stay focused on your financial goals.

Retail therapy in a cost-of-living crisis?

As power bills climb, rents outpace inflation, and interest rates bite - you’d expect Australians to be tightening their purse strings.

Not quite.

According to The Australian Bureau of Statistics, household spending rose about 6.3 per cent in late 2025, the fastest pace since 2023. Even more telling, much of the growth came from non-essential categories such as furniture, fashion, and leisure.

At the same time, Compare the Market research (where I am Economic Director) shows just how much money concerns are derailing Australians. Almost half say financial worries are affecting their mental health, with many feeling anxious or down about it. Another CTM survey also found three-quarters of respondents have lost sleep over financial stress.

And yet, we’re leaning further into debt.

Credit card spending hit a record $38.7 billion in December 2025, with almost half of those balances accruing interest... a sign many households are relying on credit while budgets remain stretched.

Put the two together: high stress levels and spending, and it paints a picture of a nation reaching for consumer comfort when it can’t control bigger economic conditions.

So why do we spend when we’re stressed? The brain science behind it is truly fascinating.

Money mind games

Dopamine, the reward chemical I mentioned earlier, spikes when it senses something good is coming. That could be food, a compliment, a text from a friend, or… a purchase.

But what’s most interesting to me, is when it is released. It peaks not when we get the reward, but before it even arrives.

So it’s the scroll, the price comparing, the adding to cart when the magic really happens.

Shopping ticks many neurological boxes that excite us:

• Novelty: something new.

• Anticipation: waiting for it to arrive.

• Control: you get to choose.

• Identity reinforcement: this is who I am - or who I want to be.

Click, buy, regret

Online shopping is particularly tempting ... it’s basically dopamine on demand.

There’s no closing time, and no pause between wanting and having. Algorithms also feed you suggestions based on what you’ve searched and then there are things like sale countdown clocks (“only two left in stock”) to keep you hooked.

The layered reward system is also delicious, delivering multiple happy hormones (dopamine, endorphins and serotonin) as you pass through the stages - searching - add to cart, buy now - and … delivery!

When might it be a problem?

Online shopping feels good, but it can become a problem if:

• You feel guilty very soon after the rush.

• Parcels arriving lift your mood more than what’s inside them.

• You hide purchases or downplay spending.

• You often rely on credit to fund “treats”.

• You shop when stressed or upset as an emotional coping tool.

Why the high fades so quickly

Have you noticed after your parcel arrives, that you can soon forget about it?

Psychologists call this ‘hedonic adaptation’ where we quickly get used to new things. The shoes become just shoes. The gadget becomes household clutter. The new rug becomes old.

Then guess what happens?

We seek another small hit.

Add to cart.

Ways to beat dopamine at its own game

Now that we understand how our brain chemistry works when it comes to spending, particularly online, we can take back control.

The goal isn’t to stop purchasing altogether. It’s to add space between impulse and action, so your logical brain can ask: “Do I really need this?” “Will I regret it?”

I suggest the following:

• The 24-hour rule: Leave the item in your cart for a day. Dopamine thrives on urgency. Time weakens it. If you still want it tomorrow and it fits your budget, then that’s a more considered decision.

• Track your purchases: Not to shame yourself, but to spot patterns. Do you shop after stressful workdays? After arguments? Late at night? Awareness reduces autopilot behaviour.

• Remove saved credit card details: Remove snap buying functionality. Force yourself to manually enter your card - it will give you some much-needed time to think.

• Find alternative sources of dopamine: Exercise, social connection, or even tidying your space can all trigger reward pathways without the financial fallout.

Retail therapy is real

When we are bored, stressed or upset our brains seek relief and comfort. That’s just being human.

The trick is learning what actually makes you feel better, not just for a few minutes, but in the long run.

Because while a parcel on the doorstep can deliver a quick thrill, financial security delivers something far more lasting: peace of mind.

Why you need superannuation to fund a long retirement

If you needed extra motivation on why you should be focusing on maximising your superannuation, this table should help.

It shows retirement in Australia is getting longer as we live longer. Our average life expectancy is now 84 years - that’s the oldest behind the Japanese …

Something to tap into your retirement calculator, perhaps?

Have a great week, everyone.