Do I really need $1 million to retire?

Have you heard the mantra that you’ll need 1 million dollars or more to retire?  It’s the figure often thrown around as the financial retirement ideal. But everybody has different ideas and means for their retirement. There is no magic super number.

Most people heading in to retirement will not have one million dollars in super. In fact, the most recent Australian Bureau of Statistics data shows at retirement age men have an average balance of $322,000 compared to $180,000 for women1.

The suggestion that you’ll need $1 million in retirement ignores the role of the Government Age Pension. Yet, seven out of ten older Australians receive either a part or full Government Age Pension2. So it is unlikely that super will be your only source of retirement income.

To start working out how much you might need for retirement, you may wish to consider:


Your day-to-day expenses

How much do you spend on groceries and everyday items? How often will you want to go out to eat? Take a holiday? Do you still need to do work on the house? Are there hobbies you’ll participate in that will require you to buy equipment?

Finding your own retirement number starts with a retirement budget. You'll have to plan for daily expenses and even for unexpected costs. And how much money you'll need to retire will also depend on any outstanding debts you have. You may be one of the 60% of Australian home owners who are still paying off their mortgage so if you will still owe money on your home at retirement age, factor this in3.


Eligibility for government entitlements

The Age Pension is a government entitlement which is paid to people who meet the age and residency requirements. The amount you receive depends on a range of factors such as your assets, how much super you have and any other income you may receive in retirement such as rental returns.  

Learn more about super and the age pension

If you’re not eligible for the age pension, you may be eligible for other benefits such as a Seniors Health Card which can assist you with the cost of prescription medication and other health services.

Find out more


How long you'll spend in retirement

Australians are living longer thanks to better nutrition, public health and medical advances. 40% of women who are 65 today and 26% of men who are 65 today are estimated to live to at least 90 years old well above the average life expectancies for men and women4.

Life expectancy 
Current Age Male Female
45 82 85
55 83 86
65 84 86
75 87 89
85 91 92
(Compiled from Australian Life Tables, 2010-2012, Australian Government Actuary. Released 2014. Next update expected 2019)

Life expectancy calculators use a lot of data to estimate how long you might live so it could give you an indication of just how many years to prepare to spend in retirement. But it's important to remember algorithms play the averages and can't predict how long you will actually live. So it may be better to estimate that you will live longer than the average when calculating your retirement income needs.    


What kind of lifestyle you want to lead when you retire

For some people, retirement means international travel, while for others it might mean developing artistic hobbies or perhaps simply spending more time with loved ones. The type of lifestyle you want to lead in retirement will play a role in determining how much money you need for life after work.

If you would like to live with the same level of comfort as you did during your working life, you may want to figure out how much you need to cover those expenses minus any work related expenses. Or, if you’re happy to live more modestly after you retire, you may not need as much.

2 Australian Bureau of Statistics, 3101.0 Australian Demographic Statistics, June 2016  Department of Social Services, DSS Demographics March 2017 (2.5 million receive Age Pension) 
3 Based on data from the Australian Bureau of Statistics, 2016 Census of Population and Housing
4 These probabilities are based on the Australian Life Table 2010-12 available here:

This information is general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898. 

Back to top