SuperGuide

Superannuation and retirement planning information

Is $1.6 million in super enough to retire on?

Is $1.6 million in super enough to retire on?

by 2 Comments

Reading time: 2 minutes

Since 1 July 2017 there has been a $1.6 million limit on the amount you can transfer into a super account in pension phase. The question is, is this an arbitrary figure dreamed up by bureaucrats or is it enough for a dream retirement?

The $1.6 million balance transfer cap applies to individuals, which means a couple could have up to $3.2 million in individual accounts. However, if a couple has one account between them in a single name, the $1.6 million limit applies.

Note: The cap is currently set at $1.6 million but is due to increase to $1.7 million from July 2021. Learn more in SuperGuide article Definitive guide to the Transfer Balance Cap.

Using MoneySmart’s Retirement Planner we have calculated how much income $1.6 million in super will generate under a range of scenarios including:

  • Whether you are single or in a couple.
  • The age you plan to retire. We have selected 60, which is a common goal, then 65, 66, 67, 68, 70 and 75 to show the impact of delaying retirement.
  • How long you want your money to last. We run the numbers for age 85, 90, 95 and 100 on the basis that the average retiree will live until their mid-80s and some will celebrate 100.
  • The return on your $1.6 million, net of fees. The return your super investments earn in retirement will depend on the type of investments you choose. A higher ratio of growth to defensive investments will result in a higher long-term return. To demonstrate the difference a few percentage points can make, we break down the annual income received for an average net return of 2%, 3%, 4%, 5%, 6%, 7% and 8%.

Note: We do not consider it realistic to achieve returns of 7% or 8% per year net of all fees, particularly over such a long time period, but we have added these as points for comparison after requests from readers.

Discover the top performing pension funds and their long-term returns

We also assume you are a homeowner and include income from a full or part Age Pension if you are eligible (this may happen as your super balance reduces over time). However, we don’t take into account income from assets you may hold outside super.

All figures are in today’s dollars (adjusted for inflation). We have assumed an annual 2.5% rise in cost of living and an additional 1.5% rise in living standards per year.

Where to go for more

We hope that the figures in the tables below will get you thinking. 

For more information on the factors to consider when planning your retirement income needs, refer to the SuperGuide article How much super do I need to retire?

The data in these tables is a small selection of possible outcomes. To plug in your own numbers, check out SuperGuide’s Super to income Reckoner which has more than 13,000 options.

We also encourage you to try out MoneySmart’s Retirement Planner calculator with your projected super balance, retirement age, length of retirement and estimated investment returns. The calculator also allows you to enter outside savings and investments.

Disclaimer: This article is only intended to give approximate retirement income figures that $1.6m in super may achieve. These figures do not take into account any of your personal circumstances or assets, and are also based on projections about future investment returns which may not be achieved. We recommend that you undertake your own additional research for your own retirement planning, and wherever possible seek independent financial advice.

Income generated from a $1.6 million retirement super balance

First let’s look at various scenarios for a couple with a combined balance of $1 million on retirement, which they transfer into a super pension account.

Couple: Retiring at 60

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$67,837$72,236$77,155$82,729$88,884$95,759$103,324
85No$47,292$53,513$60,712$68,566$77,004$85,887$95,362
90Yes$59,833$63,578$68,057$73,184$78,987$85,752$93,451
90No$38,652$44,237$50,898$58,722$67,399$76,614$86,416
95Yes$54,610$57,824$61,693$66,343$71,921$78,557$86,355
95No$32,818$37,752$43,817$51,278$60,286$70,007$80,155
100Yes$51,080$53,645$57,037$61,316$66,505$73,050$81,024
100No$28,647$33,014$38,473$45,319$54,009$64,847$75,689

Couple: Retiring at 65

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$80,459$85,519$90,925$96,938$103,314$110,275$117,827
85No$61,272$67,939$75,210$83,038$91,274$99,921$108,956
90Yes$68,133$72,331$77,236$82,729$88,884$95,759$103,324
90No$47,875$53,841$60,727$68,494$76,993$85,887$95,362
95Yes$60,575$64,185$68,280$73,185$78,987$85,752$93,451
95No$39,426$44,654$50,916$58,387$67,072$76,582$86,416
100Yes$55,493$58,463$62,128$66,611$71,938$78,557$86,355
100No$33,687$38,251$43,828$50,681$59,095$69,401$80,188

Couple: Retiring at 66

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$83,839$88,962$94,521$100,566$107,047$114,065$121,547
85No$64,835$71,655$78,998$86,764$94,993$103,553$112,543
90Yes$70,127$74,490$79,457$85,093$91,264$98,155$105,733
90No$50,095$56,188$63,162$70,960$79,372$88,267$97,614
95Yes$61,871$65,532$69,823$74,827$80,750$87,475$95,164
95No$40,931$46,263$52,617$60,144$68,817$78,219$87,945
100Yes$56,372$59,410$63,233$67,756$73,185$79,864$87,630
100No$34,795$39,451$45,099$51,984$60,408$70,655$81,258

Couple: Retiring at 67

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$87,643$92,862$98,562$104,636$111,183$118,230$125,696
85No$68,909$75,773$83,162$90,951$99,115$107,647$116,521
90Yes$72,323$76,849$81,949$87,639$93,979$100,852$108,384
90No$52,517$58,742$65,757$73,599$81,972$90,773$100,076
95Yes$63,215$67,036$71,447$76,618$82,574$89,354$97,002
95No$42,559$48,000$54,436$62,018$70,634$79,946$89,454
100Yes$57,271$60,462$64,377$68,945$74,485$81,211$88,884
100No$35,984$40,710$46,429$53,353$61,792$71,979$82,443

Couple: Retiring at 68

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$91,852$97,278$103,018$109,179$115,838$122,845$130,257
85No$73,408$80,374$87,766$95,565$103,678$112,166$120,952
90Yes$74,712$79,433$84,656$90,470$96,777$103,667$111,183
90No$55,176$61,528$68,665$76,496$84,759$93,561$102,754
95Yes$64,740$68,620$73,167$78,455$84,544$91,358$98,930
95No$44,310$49,864$56,385$63,994$72,651$81,752$91,353
100Yes$58,313$61,574$65,567$70,290$75,914$82,652$90,356
100No$37,252$42,058$47,832$54,807$63,243$73,358$83,688

Couple: Retiring at 70

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$102,070$107,660$113,250$120,078$126,713$133,765$141,215
85No$84,258$91,368$98,795$106,537$114,578$122,939$131,562
90Yes$80,459$85,519$90,925$96,938$103,314$110,275$117,827
90No$61,346$67,937$75,210$83,038$91,274$99,921$108,956
95Yes$68,133$72,331$77,236$82,729$88,884$95,759$103,324
95No$48,305$54,031$60,734$68,437$76,975$85,887$95,362
100Yes$60,710$64,225$68,326$73,231$78,987$85,752$93,451
100No$40,072$45,039$50,620$57,970$66,383$76,334$86,429

Couple: Retiring at 75

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$144,917$151,150$157,552$164,297$171,083$178,365$185,773
85No$128,986$136,253$143,749$151,402$159,246$167,269$175,469
90Yes$102,080$107,655$113,669$120,096$126,724$133,778$141,230
90No$84,381$91,380$98,795$106,537$114,578$122,939$131,562
95Yes$80,811$85,642$90,959$96,944$103,324$110,299$117,838
95No$62,105$68,281$75,235$82,946$91,256$99,921$108,956
100Yes$69,353$73,186$77,683$82,870$88,889$95,753$103,333
100No$49,426$54,680$60,766$67,821$76,021$85,432$95,328

The following scenarios are for a single person with a retirement super balance of $1.6 million which they transfer into a super pension account.

Single: Retiring at 60

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$56,196$61,195$67,061$73,651$80,974$89,019$97,704
85No$47,207$53,449$60,605$68,462$76,856$85,765$95,176
90Yes$48,430$52,497$57,216$63,817$71,165$79,357$88,383
90No$38,573$44,139$50,802$58,622$67,284$76,459$86,253
95Yes$43,524$46,909$51,248$56,895$64,081$72,461$81,815
95No$32,754$37,684$43,730$51,173$60,182$69,885$80,028
100Yes$40,046$43,008$46,775$51,758$58,528$67,214$76,977
100No$28,593$32,957$38,403$45,251$53,919$64,742$75,539

Single: Retiring at 65

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$69,485$75,005$81,231$88,052$95,374$103,308$111,700
85No$61,189$67,819$75,086$82,888$91,111$99,745$108,754
90Yes$56,957$61,630$67,192$73,650$80,974$89,019$97,704
90No$47,794$53,742$60,585$68,372$76,860$85,765$95,176
95Yes$49,413$53,265$58,021$63,918$71,097$79,357$88,383
95No$39,357$44,575$50,814$58,270$66,954$76,463$86,253
100Yes$44,576$47,845$51,875$57,066$63,794$72,309$81,815
100No$33,627$38,191$43,765$50,590$58,991$69,277$80,062

Single: Retiring at 66

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$72,885$78,630$84,970$91,834$99,158$107,050$115,358
85No$64,775$71,529$78,854$86,588$94,828$103,396$112,344
90Yes$58,980$63,822$69,512$76,038$83,406$91,410$100,049
90No$50,006$56,090$63,050$70,833$79,251$88,109$97,445
95Yes$50,699$54,715$59,579$65,584$72,829$81,049$89,974
95No$40,841$46,172$52,520$60,039$68,701$78,076$87,778
100Yes$45,529$48,877$53,026$58,298$65,102$73,589$82,957
100No$34,735$39,382$45,015$51,892$60,304$70,530$81,142

Single: Retiring at 67

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$76,724$82,650$89,059$95,940$103,276$111,147$119,454
85No$68,779$75,598$83,019$90,768$98,940$107,453$116,311
90Yes$61,234$66,231$72,049$78,655$86,047$94,031$102,575
90No$52,422$58,637$65,665$73,488$81,845$90,650$99,892
95Yes$52,107$56,229$61,257$67,372$74,684$82,844$91,708
95No$42,476$47,912$54,339$61,884$70,523$79,754$89,427
100Yes$46,545$49,991$54,243$59,620$66,490$74,937$84,177
100No$35,915$40,643$46,345$53,265$61,682$71,852$82,300

Single: Retiring at 68

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$81,112$87,152$93,612$100,530$107,892$115,746$123,949
85No$73,280$80,250$87,641$95,375$103,512$111,957$120,751
90Yes$63,672$68,879$74,789$81,553$88,876$96,833$105,350
90No$55,078$61,418$68,547$76,358$84,651$93,406$102,576
95Yes$53,686$57,922$63,086$69,310$76,619$84,734$93,559
95No$44,244$49,765$56,285$63,887$72,479$81,650$91,190
100Yes$47,661$51,192$55,564$61,009$67,914$76,310$85,487
100No$37,178$41,988$47,755$54,713$63,122$73,231$83,525

Single: Retiring at 70

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$91,620$97,813$104,375$111,453$118,852$126,638$134,671
85No$84,127$91,209$98,619$106,348$114,382$122,716$131,339
90Yes$69,485$75,005$81,231$88,052$95,374$103,308$111,700
90No$61,237$67,823$75,086$82,888$91,111$99,745$108,754
95Yes$57,295$61,799$67,223$73,643$80,974$89,019$97,704
95No$48,201$53,959$60,626$68,299$76,851$85,765$95,176
100Yes$50,214$53,900$58,478$64,079$71,064$79,346$88,383
100No$40,006$44,961$50,837$57,861$66,265$76,201$86,246

Single: Retiring at 75

Money lasting until ageEligible for Age Pension?2%3%4%5%6%7%8%
85Yes$135,251$141,872$148,845$155,945$163,351$170,998$178,819
85No$128,811$136,051$143,459$151,133$158,958$166,973$175,159
90Yes$91,645$97,813$104,375$111,453$118,852$126,638$134,671
90No$84,225$91,206$98,619$106,348$114,382$122,716$131,339
95Yes$70,270$75,433$81,386$88,073$95,374$103,308$111,700
95No$61,994$68,168$75,104$82,798$91,087$99,745$108,754
100Yes$58,915$63,104$68,032$73,877$80,786$88,903$97,702
100No$49,334$54,582$60,658$67,709$75,886$85,281$95,169

Assumptions

  • You own your own home and have personal assets of $25,000 or less. These calculations do not allow any investment assets outside super. Note that the amount of investment assets you have can greatly affect the amount of Age Pension you are eligible for.
  • Results are in today’s dollars. Inflation costs are a 2.5% rise per year in cost of living, plus a 1.5% additional rise per year in living standards.
  • You retire after you reach Age Pension age.
  • All returns are net of fees.
  • Calculations for couples assume both are same age and super balance is split evenly.
  • We recommend you also review the assumptions that MoneySmart list below their calculator.
  • Calculations were made April 2021.
Learn more about how much income your super could generate in the following SuperGuide articles:
Learn more about how much super is enough in the following SuperGuide articles:
Learn more about how much super you need for a particular income in retirement in the following SuperGuide articles:

Related topics

How much super do I need? Plan your retirement

IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

Reader Interactions

Comments

  1. Ian says

    I have a question relating to your retirement table for $1.6M in super.
    For a couple with $1.6M your table shows yes & no for pension eligibility? I do not understand how a couple with this amount in super is eligible for the pension? Can you please clarify your assumptions

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *