Do I really need $1million in super to be able to retire?


Over the years there have been a number of articles published extolling the virtues of having a million dollars or more, in super to be able to retire comfortably.

However, such lofty aspirations are clearly out of the reach for many, if not most Australians.

The real answer to this question is….it depends.

It will depend on several factors including:

  1. How much income would I like to receive in retirement?
  2. Will my super be my only source of income?
  3. Am I entitled to the government age pension?
  4. How long will I live?
  5. Am I prepared to run down my capital during my lifetime, or do I wish to leave a legacy for the next generation?
  6. Do I own my own home, or am I renting?
  7. Will I be carrying any debts into retirement?
  8. What type of investor am I (conservative, moderate, or aggressive)?
  9. Will I need lump sums during my retirement to purchase a new car, renovate the kitchen, or spend on other big-ticket items like overseas holidays?

These are just a few of the factors that need to be considered when exploring this question.

Many readers will be aware of the Retirement Standard published by the Association of Superannuation Funds of Australia (ASFA).

First published in 2004, the Retirement Standard provides a detailed budget of the likely costs to support both a modest, and a comfortable lifestyle for Australian retirees. The Standard provides figures for both singles and couples. Furthermore, separate budgets are published for those up to age 85, and those over 85.

Not only does the Standard publish an exhaustive budget for each group, it also provides an estimate of the amount of savings (super) a single person and a couple will need to have to support their preferred lifestyle.

The most recent budget[1] for a comfortable lifestyle was $46,494 for a single person and $65,445 for a couple. To support this level of spending, it is estimated a single person will need approximately $545,000 in super, and a couple will need $640,000. It’s anticipated that, at least for part of their retirement, retirees will have their income needs supplemented by the government’s age pension.

ASFA’s projected superannuation balances estimate that the superannuation savings will be exhausted when a person reaches their early 90’s.

However, the ASFA Retirement Standard has not been without its critics, but up until now it has been the only readily available resource for people wishing to explore the likely costs of living in retirement.

One of the concerns with the ASFA Retirement Standard is it overstates the level of income many people spend in retirement.

Whether this is right or wrong is a question for another day however I feel the Standard, in the absence of any meaningful alternative, is the best we have had to work with. At the end of the day, retirees, and those approaching retirement, will have a gut feel for the level of income they think they will need to support their preferred retirement lifestyle.

Understanding the income, we would like to receive in retirement, is the starting point.

In March 2022, Super Consumers Australia (SCA), an independent, not-for-profit consumer group published a Report “Retirement Spending Levels and Savings Targets”. SCA has partnered with CHOICE.

Like the ASFA Retirement Standard, the SCA report considers retirement spending for singles and couples at a low, medium, and high level. Rather than developing their own budgets, the report relies on spending data available from the Australian Bureau of Statistics.

By comparison, the SCA report suggests the level of income and target savings a homeowning single person and a couple (aged around 67) will need is:

Status Spending Level Spending Savings Required
Single Low $28,000 $70,000
  Medium $37,000 $259,000
  High $50,000 $758,000
Couple Low $40,000 $88,000
  Medium $55,000 $369,000
  High $73,000 $1,021,000


The estimates project the income to be paid through until age 90 and is supplemented by the age pension as it becomes available.  

While more research will enable advisers and their clients to make more informed decisions, the issue is an individual one.

We generally have a rough expectation of how much income we would like in retirement. When that is coupled with other questions around our desire to leave a legacy and importantly, how long that income must last, the amount we need to have saved for our retirement becomes a very fluid number. One size certainly does not fit all.

So, back to the question posed at the start of this article, do I really need $1million in super to be able to retire?

The answer is “it depends”.

For those looking to support a long and lavish retirement lifestyle, with something being left over for the next generation, then $1,000,000, or more, is likely to be on the cards. For others with more modest aspirations, a comfortable lifestyle can be achieved with less than $1,000,000.

Planning for retirement is complex and involves many “moving parts”. As most people only get one chance at getting their retirement planning right, the support of a qualified financial adviser is highly recommended.    


[1] March 2022