Everyone from the Prime Minister down agrees they can't live on the single-age Government pension of $14,217 a year or $273 a week.

The fact that thousands of Australians are doing so proves it can be done but few will admit to it being easy or that they are enjoying life as much as they would like.

For many retirees, the Government's panacea in the form of a superannuation guarantee levy, introduced for all Australians in 1992, came too late.

But even younger generations who have had the benefit of the 9percent levy since the day they started work could find themselves relying on a Government pension unless they make additional savings.

Exactly how much someone needs to live comfortably in retirement depends on a host of factors including when you plan to retire, your age and your general spending habits.

The Westpac Association of Superannuation Funds of Australia Retirement Standard estimates it will cost a person about $36,319 a year to maintain a comfortable lifestyle in retirement.

The association assumes the person is healthy, engaged in a range of leisure and recreational activities, has a good standard of living, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and travels domestically and, occasionally, internationally for holidays.

A couple who want the same level of comfort in retirement would need to spend about $48,648. In both cases, retirees would own their home.

The nest egg

The only way to avoid living off the age pension in retirement is to create your own pool of wealth.

This pool will include your employer superannuation contributions, any additional savings to super and any additional investments.

How much extra you need to save depends on how much you plan to spend in retirement, the age you want to retire and how long you expect to live.

Superannuation is the obvious way to save for retirement because of the tax advantages.

Louise Biti, a director of financial planning strategy specialist Strategy Steps, says the earlier people start saving the better.

"The more you save the better off you are going to be. It doesn't matter what age you are, it will always be a trade-off between what you spend in maintaining your current lifestyle and what you spend in retirement," she says.

Biti says to start by working out how much income you will need in each of your retirement years, and add any probable lump sum expenses such as a new car or holidays.

The retirement planner calculator on the Australian Securities and Investments Commission financial tips website - http://www.fido.gov.au - is a useful tool to work out how much you may need to save.

Take, for example, a married couple planning to retire at age 65 on a combined income of $40,000 (in today's dollars) a year, each year from age 65 to 100. Assume they own their own home but have no super savings apart from contributions from their employer as part of the super guarantee.

They then decide to contribute to their super by salary sacrifice. Earnings from their super investments are assumed to be 8.5percent a year.

Biti says if the couple are aged 35 today, contributions to their super (from SG and salary sacrifice) need to total $17,000 a year to meet their $40,000 a year income target.

A couple aged 45 today need to ensure super contributions total $31,000 a year. A couple aged 55 need to ensure contributions total $73,000 a year.

Biti says if those figures look daunting the couple could factor in the age pension, in which case the amounts needed to be saved to generate income of $40,000 a year, would be roughly halved for each age group.

Still spending

Suzanne Haddan, Sydney-based director of financial advisers BFG Financial Services, says a mistake many people make is to assume their needs reduce when they retire.

"I've seen no evidence of this. Spending needs may change but in 20 years of advising, people don't actually spend less when they get older," she says.

Haddan's theory is people actually spend more when they are not working. "When you are not earning money you have time to spend it," she says.

Since no one knows how long they are going to live, and many people live longer than they expect, Haddan prefers to ignore the life expectancy tables and take whatever income someone thinks they may need and multiply it by 20. For example, if you think you need $36,000 a year, multiply the amount by 20. In this case, the total needed is $720,000.

First State Super puts the calculation another way; for every $100,000 of after-tax lump sum superannuation benefits a 60-year-old male or female has on retirement, he or she can expect to purchase a fixed annual income (in the form of an annuity) of $8794 for 20 years.