The million dollar retirement myth

3 min read

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 much less.

Money is perhaps one of the biggest causes of stress for most people. Do I have enough? What should 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? We might not be able to answer how long you’ll live, but we can help you look at what your lifestyle could look like, even if you don’t have $1 million saved.

Your savings are not your only option

If you are nearing retirement now, you haven’t had the benefit of an entire career of Superannuation Guarantee payments – so your superannuation balance might not be high either. 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 you though, don’t forget you may be eligible for the Age Pension. While the Age Pension only covers a very basic lifestyle for someone who already owns their home1, even small amounts extra from your superannuation can improve your life.

A modest lifestyle

The Association of Superannuation Funds Australia’s (ASFA) Retirement Standard explores what you might need to fund your retirement. A modest lifestyle factors for a home owner using the Age Pension for part of your retirement income supplemented by superannuation and can be achieved for a couple with only $35,000 in superannuation and a single person with $50,000 in superannuation at retirement.1

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).

You can see a full comparison at

Getting more comfortable

A lifestyle with 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 mean $640,000 at retirement for a couple or $545,000 at retirement for a single person1.

So when might I need $1 million to retire?

What you need in retirement really depends on the lifestyle you want to live. Adding a few more holidays to the annual plan, including international trips, a few renovations to the house, and some more expensive restaurant dining compared to the ASFA expectations for a comfortable lifestyle might mean the balance you need at retirement needs to be higher, perhaps even in the $1 million superannuation balance range1.

Or if your vision involves the red carpet, you might need to aim for a ‘Beyonce’ style balance on retirement.

The key is every little bit extra you save may help give you more options for your retirement.

More savings to give you more options

Even for those looking at a modest or basic retirement, stepping up the savings might see you jump up to regular coffee purchases or takeaway meals, or perhaps a few visits to the movies in retirement. In fact, according to the Australian Institute of Superannuation Trustees, if you had a balance of $55,000 and boosted it through extra contributions to $75,000 at retirement, you would have an increase of 10% in your annual retirement income2. That extra $20,000 in contributions might sound hard to do, but if you put in an extra $20 a week into your superannuation on top of your Superannuation Guarantee payments, you would have contributed that amount in just under 20 years – that’s a couple of dollars each day3. Just don’t forget to check that you don’t go over the contribution caps for superannuation – you can find out more at

You could even consider continuing some form of work in retirement to boost your income. There are added benefits to this such as a bigger social network – isolation can be a challenge for some retirees.

So do you need $1 million in retirement? Not necessarily, it depends on you. A financial adviser can help you plan and budget for your retirement, whether years away or around the corner. Request a call.

1. ASFA Retirement Standard December 2016.
2. AIST Super Reality Check: Busting the $1 million retirement myth August 2015
3. Calculation is based on 52 weeks in a year x $20 per week x 20 years = $20,800. This does not factor fluctuations in investment value once funds are invested in superannuation. This also does not take into account fees, insurance premiums, adviser fees on accounts or other fees and charges which may affect the final balance.

Learn 14 Mar 2019
Learn about contributing to your superannuation and the caps that apply.
5 mins
Learn 15 Aug 2016
We explain the rules about how much you can contribute into super each year – and when you can start to draw on your super, in line with your age and life stages.
10 mins

This information  is current as at 31/03/2017.

This information has been prepared without taking account of your personal objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. 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.

Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis.  There will be tax consequences if you breach these caps.  For more detail, speak with a financial adviser or visit the ATO website.

The tax position described is a general statement and is for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. For more information, visit the ATO website.

This article 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.