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Bec WilsonBec WilsonMoney contributor

September 12, 2026 — 5:00am

September 12, 2026 — 5:00am

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The average Australian approaching retirement today has a decent chunk of money in super, but let’s face it, it’s probably not the $1 million balance we so often hear about.

Around the age of 65 – the average that people retire – average super balances sit at about $466,000 for men and $407,000 for women. The median retirement balance is closer to $219,000 at 65 to 69 today.

Let’s face it, the average Australian approaching retirement doesn’t have $1 million in super.Let’s face it, the average Australian approaching retirement doesn’t have $1 million in super.istock

That means the average Australian is not grappling with a wealth problem; they’re grappling with how to make retirement work without much access to advice or help from the system. There’s a wonderful lesson hidden in our retirement system for exactly these people that most are unaware of: super and the age pension are designed to work together.

The question to ask is: “What income could my super and the age pension produce together?”

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Average super balances, when combined with the age pension, can produce a surprisingly decent retirement income. There’s even a point at which someone with less super and savings can have more annual income to live on than someone with considerably more in super.

I call it the sweet spot – a point where your super and savings and the age pension work particularly well together to produce retirement income.

The age pension increases again on September 20, along with changes to the deeming rate used on the income test. Other caps moved with indexation on July 1, which means the numbers have shifted, and so has the sweet spot.

So I’ve crunched the new numbers to show you where the sweet spot sits now – and there are some good takeaways in it.

The sweet spot for a single home owner

Let’s start with a single home owner with $368,000 in assets, $338,000 in super and savings and $30,000 in home contents and car (Centrelink counts these for the assets test too).

For the purposes of comparing apples with apples, we’ll assume a 5 per cent drawdown rate from super, across all the scenarios. So, 5 per cent of $338,000 gives our single retiree $16,900 in super drawdown a year – and remember, this is tax-free if it’s in the retirement account.

Average super balances, when combined with the age pension, can produce a surprisingly decent retirement income.

At this level of total assets, they could also receive about $29,450 a year from the age pension when they start out – and if their super balance declines, this amount will probably rise. Add the two together, and our retiree has about $46,350 a year in income from super and the age pension to live on. They could also pick up a little casual work, earning up to $7800 a year without reducing their age pension income, bringing them close to the target for a comfortable retirement set by ASFA of $55,923 a year for a single person.

And remember, they only started with $338,000 in super.

By contrast, let’s look at a single home owner with almost double the amount in super. This second retiree has $670,000 in super and savings, plus the same $30,000 of other assessable assets – $700,000 in total. Their 5 per cent drawdown is much healthier, at $33,500 a year. But there’s a big catch. With $700,000 of assessable assets, their age pension has tapered down to only about $3550 a year. Add the two sources of income together, and they only get to about $37,050 of annual income. They need to draw more from their own savings if they want a higher standard of living.

This is the sweet spot in action.

Why does it happen?

The answer lies in the age pension means tests. Centrelink assesses both assets and income, and as your wealth increases, eventually the assets test becomes the one that matters.

Once you get above the base assets test threshold, which sits at $333,000, every additional $1000 of assessable assets can reduce your age pension by $3 a fortnight or $78 a year.

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Now, remember for this exercise, I’ve assumed our retirees withdraw 5 per cent of their super each year to fund their retirement. So if they have another $1000 of assets in their super fund, that means another $50 a year they could draw out and spend that year. It’s not an investment return – it’s their own money being drawn down. For a period, every extra $1000 you hold can give you $50 more from your own money, but cost you $78 in age pension benefits.

The sweet spot for a single home owner from September 20 sits at about $368,000 of total assessable assets – about the point where the income test and the assets test cross over and the harsher assets test taper begins to determine the pension available.

The sweet spot for a home owner couple

For couples who own their own home, the same thing happens, just at higher age pension thresholds. From September 20, I calculated a sweet spot at around $542,000 of total assessable assets. If we allow $30,000 for cars, contents and other assessable assets, that leaves about $512,000 in super and savings. Using the same 5 per cent drawdown, they could draw about $25,600 a year from their super. At this level of assets, their combined age pension would be about $45,160 a year.

Put the two together, and that’s $70,760 a year in retirement income, and again, the couple can earn $7800 without impacting their age pension income.

What if you don’t own your own home?

Non-home owners have a higher assets test threshold, recognising that they don’t have the value of a home sitting outside the age pension assets test. That means their sweet spot is higher too.

For a single, non-home owner, I calculate it to sit at about $713,000 of total assessable assets. Assuming $50,000 of that is cars, contents and other assets, that leaves about $663,000 in super and savings. A 5 per cent drawdown gives them about $33,150 a year, while their age pension would be around $23,350 – a combined income of about $56,500 a year.

There’s an important catch in these numbers too. I haven’t included rent assistance, which is an important support for a non-home owner who is eligible for the age pension. So don’t compare the headline number directly. The important point is that the sweet spot exists for renters and other non-home owners too – it just sits higher.

Take time to understand how the age pension and super work together.Take time to understand how the age pension and super work together.Bethany RaeShould you aim for the sweet spot?

No, and that’s not the reason I’m showing it to you. The person with $700,000 in assessable assets in my early example is still wealthier than the person with $368,000, and they have substantially more flexibility when something goes wrong, more capacity to spend on travel or help their family, and more protection if they live a very long life, even if they get less from the age pension.

They can also choose to draw more than 5 per cent of their super balance in the early years. I show you the sweet spot to help the people on the other side of the equation – the average Australians trying to find their way with very little access to financial advice. They’re the people approaching retirement with $300,000 or $400,000 or even $500,000 in super who look at their balance and wonder how on earth they are going to make it last.

If that’s you, take time to understand how the age pension and super work together and can – topped up with a little work if you need – deliver you a closer-to-comfortable retirement.

Bec Wilson is the author of the bestseller How To Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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Bec WilsonBec Wilson is the author of How To Have An Epic Retirement and writes a weekly newsletter for pre- and post-retirees at epicretirement.net.From our partners