No doubt you’ve heard it before: You need $1 million in super to retire comfortably in Australia. But is this reality, or a myth?
A clean round number may make things feel simple and straightforward because you’re being handed a target amount. But the reality for most people is wildly different. So, why is this belief so prevalent?
Coupled with the Age Pension, this could generate a sustainable, inflation-linked retirement income of more than $81,000 per year. But truthfully, how much you need depends primarily on how much you want to spend and how early you plan to retire. This is where your understanding of your own retirement plan becomes critical.
The best guide to what you need to spend in retirement is what you spend today, adjusted for things that will change: you’ll stop saving for retirement, hopefully the kids will have left home and become self-sufficient, you’ll have paid off your home loan and you’ll no longer have to commute to work.
On the other hand, it’s likely that you’ll spend more on leisure and travel as you have the free time to do all those things you didn’t have time to do while you were focused on working, raising kids and paying off your home. You’ll also likely be spending more on your health.
Overall, most retirees naturally spend less as they get older. This isn’t out of caution; it generally aligns with more activity and spending in your younger years, and less later on. Your goals and spending plan will look very different throughout retirement, and a one-size-fits-all target of $1 million is unlikely to be the right fit for everyone.
What does the industry say?
The Association of Superannuation Funds of Australia (ASFA) provides an estimate of the income required to maintain a ‘comfortable’ standard of living in retirement. In March 2026, this was $55,923 for a healthy, homeowning, single person aged 65–84 ($78,566 for a couple in similar circumstances). This, it says, requires a super balance of $630,000 and $730,000 respectively on retirement at age 67.
The corresponding income required for its modest retirement standard is $52,473 for couples and $36,434 for singles. The savings required to deliver this income are much lower at $120,000 for a couple and $110,000 for singles, because the Age Pension provides for a greater portion of the income.
ASFA defines a ‘comfortable’ retirement lifestyle as one that enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities; have a good standard of living by being able to purchase household goods, private health insurance, a reasonable car, good clothes and a range of electronic equipment; and travel domestically and enjoy the occasional international holiday.
Alternative views
An alternative set of benchmarks is published by not-for-profit advocacy group Super Consumers Australia. Its benchmark is based on actual household spending rather than on costing a specific lifestyle.
Its recommended 2026 annual retirement income figures for homeowners are $61,000 for singles and $89,000 for couples for a high standard of living; $44,000 for singles and $64,000 for couples for a medium standard; and $32,000 for singles and $47,000 for couples for a low standard. This shows a wider range than the ASFA benchmarks, reflecting that some people spend less than the modest lifestyle figures cited by ASFA, and some spend more than the ASFA’s comfortable lifestyle amounts.
Independent think tank the Grattan Institute analysed ABS expenditure data and demonstrated that the ASFA’s ‘comfortable’ standard provides a higher standard of living than most people in the workforce enjoy today. The top 30 per cent of working-age couples and the top 20 per cent of working-age singles currently spend as much as the ASFA’s ‘comfortable’ standard.
So how much do I need to save?
Being aware of these benchmarks is all well and good, but remember, they are just examples. They aren’t tailored to your situation.
A great place to start is by comparing your lifestyle plans against the lifestyle assumptions these groups have outlined. Write down your current weekly or monthly spending, highlighting what will likely change as your needs change and your children (if you have any) leave home. Decide when you (and your partner, if applicable) want to begin winding down work or stop working entirely. Then compare your figures against these benchmarks. Make your plan flexible because you’ll likely find you’ll spend less as you wind down.
To make an accurate comparison, it’s worth understanding what these benchmarks assume. Both ASFA and Super Consumers calculate a lump sum required at retirement to generate their benchmark incomes. ASFA publishes an amount required at age 67, while Super Consumers calculates a capital sum required at age 65. Both consider any Age Pension entitlement over a lifetime. ASFA assumes a fixed rate of return and inflation of 2.75 per cent, while Super Consumers takes into account the variability of market returns. Super Consumers’ earlier retirement age assumption has a material impact on the capital required because it must fund two years of retirement income without the Age Pension. Every year you retire before 67 is another year of retirement to be funded, another year less to contribute and another year less to earn market returns.
Assumptions about market returns, the length of retirement, inflation and how the Age Pension is adjusted for price changes all significantly affect any lump-sum calculation. However, we don’t live by assumptions; we live in the real world.
Edited extract from 12 months to retire right: The step-by-step guide to build wealth and retire on your terms by Glen James & Vince Scully (Wiley, $36.95), available 28 October at all leading retailers.
Glen James is a former financial adviser, the award-winning author of The Quick-Start Guide to Investing and the creator of the money money money and Retire Right shows.
Vince Scully was named one of Australia’s most influential financial advisers in Financial Standard’s Power 50. He is the founder of Life Sherpa and author of Live the Life You Want with the Money You Have.
Disclaimer: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation or needs. Therefore, you should consider whether the information is appropriate to your circumstances before acting on it, and where appropriate, seek professional advice from a finance professional.
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