The million dollar retirement myth


Are you afraid you’ll never be able to retire? Despite the news headlines, a comfortable retirement might not need a balance of $1 million. You could retire with less.

Money can be one of the biggest causes of stress for people. Do I have enough? What will I do with it? For those retiring, the questions get bigger. Will I need to work until I die? What if I live to 100? While we may not have all the answers, identifying what kind of retirement lifestyle you’d like to have might give you a bit of an idea.

Your savings aren't your only option

If you’re nearing retirement now, you haven’t had the benefit of an entire career of Superannuation Guarantee payments – so your superannuation balance might not be as high as you’d like. Even if your retirement is still years away, you might still be worried about having a low balance. While the point of superannuation is to support your retirement, it isn’t your only option.

Some might already have plans to fund their retirement using income from sources like renting out an investment property. If this isn’t for you, don’t forget you may be eligible for the Age Pension1. While the Age Pension only covers a very basic lifestyle even small amounts from your superannuation can improve your life.

While saving for retirement can seem somewhat daunting, there are a few simple strategies to use when planning your best financial future.

A modest lifestyle

The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard explores what you might need to fund your retirement. A modest lifestyle for a home owner using the Age Pension for part of their retirement income, supplemented by superannuation can be achieved for a couple with a budget of $42,621 per year, and a single person with a budget of $29,632 per year in retirement2. Compared to just using the Age Pension, this might mean having:

  • Private health insurance (compared to none)
  • The ability to take one or two short breaks in Australia near where you live (compared to shorter breaks or day trips in your own city on the Age Pension alone)
  • An older less reliable car (compared to no car).
Even if you don’t plan to retire until you may be eligible for the Age Pension – there are small steps you can take now to secure your future after work.

Getting more comfortable

A lifestyle that includes an annual holiday in Australia, eating out regularly and a range of paid leisure activities may not need $1 million in superannuation either.

According to ASFA, a comfortable lifestyle for a home owner – which also assumes drawing down all your capital and receiving a part Age Pension – would require a lump sum of $640,000 at retirement for a couple (or an income of or $60,528 per year), or a lump sum of $545,000  at retirement (or income of $43,638 per year) for a single person2.

It could be fair to say that many Australians aspire to at least a "comfortable" retirement. Do you know what annual income would provide “comfort” by your standards?

So when might I need $1 million to retire?

What you need in retirement depends on the lifestyle you want to have. Adding a few more holidays to the annual plan, including international trips, a few renovations to the house, and expensive restaurant dining compared to the ASFA expectations for a comfortable lifestyle, might mean the balance you need at retirement needs to be higher.

At the end of the day, every little bit extra, will give you more options when it comes to retirement.

More savings to give you more options

Stepping up your savings can give a substantial boost to your retirement income. Consider the example of a 25-year-old woman earning $80,000 a year (before tax and super) who has a current super balance of $30,000. 

Using the government's Moneysmart calculator, if she just relies on her employer’s superannuation guarantee payments and doesn’t make any personal contributions, her final retirement balance at age 67 will be approximately $595,000. The income from her super, combined with her potential aged pension entitlements, provides her with an annual retirement income of $43,448 up until the age of 90.

However, if she were to make an annual personal tax-deductible contribution of $5000, her final balance would be approximately $879,000 (almost $284,000 extra). This means her annual retirement income from super and aged pension will be $52,951– or around $9,500 extra each year.

Other assumptions can be checked using the Moneysmart retirement planner calculator3.

Age 25, salary $80,000, super balance $30,000, retire at age 67


Su­per­an­nu­a­tion guarantee only

$5000 /year before-tax personal contribution

Extra amount generated

Retirement balance

Approximately $595,000


Approximately $284,000

Annual retirement income





Next: Super and retirement calculator


1 https://​​retirement-income/​age-pension-and-government-benefits
2 https://​​resources/​retirement-standard
3. Moneysmart calculator accessed on 21 June 2022 - Retirement planner -

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Things you should know

This information is current as at 1 July 2022. 

The article was prepared by BT. BT is a part of Westpac Banking Corporation ABN 33 007 457 141, AFSL and Australian Credit Licence 233714. This article provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such. This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material. Any tax considerations outlined in this publication are general statements, based on an interpretation of the current tax law, and do not constitute tax advice.  The tax implications of super investments can impact individual situations differently and you should seek specific tax advice from a registered tax agent or registered tax (financial) adviser.