Is $1.6 million in super enough to retire on?

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 will be indexed for inflation in $100,000 increments. You can read more in SuperGuide article Definitive guide to the $1.6 million 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 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 over 5 years.

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). 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% rise in cost of living and an additional 1.2% rise in living standards per year.

As you will see, depending on how long you want your money to last and the rate of return you earn on your super investments, $1.6 million does not necessarily deliver the champagne lifestyle you might expect.

Where to go for more

We hope that the figures in the tables below will get you thinking. 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 nearly 9,000 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.

Note

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 age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$70,915	$75,829	$81,264	$87,368	$94,142	$101,642	$109,841
85	No	$51,950	$59,006	$66,791	$75,140	$84,006	$93,381	$103,210
90	Yes	$62,482	$66,858	$71,905	$77,682	$84,285	$91,854	$100,326
90	No	$42,799	$49,300	$56,972	$65,550	$74,661	$84,402	$94,658
95	Yes	$56,875	$60,669	$65,236	$70,732	$77,183	$84,849	$93,588
95	No	$36,449	$42,348	$49,609	$58,430	$68,004	$78,149	$88,771
100	Yes	$52,737	$56,133	$60,326	$65,463	$71,791	$79,491	$88,575
100	No	$31,830	$37,141	$43,826	$52,308	$62,897	$73,591	$84,652

Couple: Retiring at 65

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$83,942	$89,354	$95,264	$101,652	$108,541	$116,032	$123,994
85	No	$66,191	$73,442	$81,171	$89,363	$97,959	$106,961	$116,352
90	Yes	$70,948	$75,829	$81,264	$87,368	$94,142	$101,642	$109,841
90	No	$52,245	$59,053	$66,735	$75,137	$84,006	$93,381	$103,210
95	Yes	$62,892	$67,015	$71,927	$77,682	$84,285	$91,854	$100,326
95	No	$43,220	$49,377	$56,731	$65,288	$74,617	$84,402	$94,658
100	Yes	$57,372	$61,079	$65,465	$70,753	$77,183	$84,849	$93,588
100	No	$36,974	$42,456	$49,197	$57,500	$67,578	$78,129	$88,771

Couple: Retiring at 66

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$87,419	$92,850	$98,862	$105,331	$112,295	$119,750	$127,673
85	No	$69,938	$77,181	$84,939	$93,088	$101,642	$110,559	$119,839
90	Yes	$73,168	$78,052	$83,568	$89,751	$96,562	$104,040	$112,250
90	No	$54,647	$61,464	$69,149	$77,524	$86,347	$95,644	$105,372
95	Yes	$64,433	$68,631	$73,534	$79,382	$86,050	$93,551	$101,961
95	No	$44,876	$51,072	$58,388	$66,925	$76,238	$85,952	$96,134
100	Yes	$58,484	$62,266	$66,659	$71,974	$78,460	$86,060	$94,750
100	No	$38,207	$43,706	$50,440	$58,691	$68,679	$79,250	$89,841

Couple: Retiring at 67

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$91,239	$96,853	$102,933	$109,443	$116,418	$123,858	$131,748
85	No	$74,029	$81,343	$89,051	$97,194	$105,688	$114,538	$123,709
90	Yes	$75,452	$80,521	$86,117	$92,352	$99,206	$106,664	$114,778
90	No	$57,169	$64,077	$71,799	$80,111	$88,864	$98,101	$107,755
95	Yes	$65,876	$70,211	$75,285	$81,170	$87,851	$95,373	$103,735
95	No	$46,579	$52,850	$60,279	$68,782	$78,012	$87,572	$97,659
100	Yes	$59,486	$63,364	$67,862	$73,271	$79,824	$87,368	$96,025
100	No	$39,445	$45,024	$51,808	$60,078	$70,021	$80,418	$90,924

Couple: Retiring at 68

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$95,593	$101,309	$107,438	$113,968	$121,029	$128,417	$136,301
85	No	$78,555	$85,952	$93,661	$101,759	$110,198	$117,551	$128,056
90	Yes	$77,962	$83,164	$88,917	$95,155	$102,045	$109,548	$117,550
90	No	$59,920	$66,931	$74,670	$82,930	$91,644	$100,779	$110,350
95	Yes	$67,456	$71,873	$77,082	$83,055	$89,767	$97,348	$105,650
95	No	$48,407	$54,792	$62,264	$70,756	$79,842	$89,363	$99,361
100	Yes	$60,582	$64,518	$69,125	$74,654	$81,170	$88,770	$97,367
100	No	$40,760	$46,414	$53,254	$61,542	$71,425	$81,656	$92,046

Couple: Retiring at 70

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$105,854	$111,824	$118,173	$124,777	$131,863	$139,250	$147,078
85	No	$89,516	$96,869	$104,604	$112,568	$120,948	$129,558	$138,451
90	Yes	$83,942	$89,354	$95,264	$101,652	$108,541	$116,032	$123,994
90	No	$66,260	$73,447	$81,171	$89,363	$97,959	$106,961	$116,352
95	Yes	$71,105	$75,858	$81,264	$87,368	$94,142	$101,642	$109,841
95	No	$52,519	$59,079	$66,669	$75,093	$84,006	$93,381	$103,210
100	Yes	$63,067	$67,165	$71,955	$77,683	$84,285	$91,854	$100,326
100	No	$43,677	$49,474	$56,406	$64,707	$74,463	$84,377	$94,658

Couple: Retiring at 75

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$148,978	$155,403	$162,118	$168,951	$176,154	$183,552	$191,183
85	No	$134,218	$141,651	$149,292	$157,124	$165,145	$173,346	$181,716
90	Yes	$105,854	$111,824	$118,173	$124,777	$131,863	$139,250	$147,078
90	No	$89,516	$96,869	$104,604	$112,568	$120,948	$129,558	$138,451
95	Yes	$83,951	$89,354	$95,264	$101,652	$108,541	$116,032	$123,994
95	No	$66,561	$73,483	$81,154	$89,371	$97,959	$106,961	$116,352
100	Yes	$71,613	$76,102	$81,366	$87,367	$94,142	$101,642	$109,841
100	No	$53,143	$59,216	$66,272	$74,449	$83,725	$93,371	$103,210

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 age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$59,946	$65,693	$72,160	$79,442	$86,552	$96,019	$105,261
85	No	$51,951	$58,966	$66,793	$75,139	$83,954	$93,355	$103,164
90	Yes	$51,401	$56,371	$62,518	$69,695	$77,753	$86,687	$96,350
90	No	$42,798	$49,300	$56,973	$65,549	$74,677	$84,403	$94,653
95	Yes	$45,957	$50,196	$55,639	$62,630	$70,853	$80,063	$90,154
95	No	$36,448	$42,348	$49,613	$58,431	$68,060	$78,149	$88,813
100	Yes	$42,171	$45,828	$50,649	$57,174	$65,593	$75,228	$85,702
100	No	$31,841	$37,140	$43,826	$52,303	$62,901	$73,596	$84,653

Single: Retiring at 65

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$73,592	$79,780	$86,519	$93,809	$101,659	$109,972	$118,849
85	No	$66,191	$73,403	$81,158	$89,374	$97,967	$106,964	$116,352
90	Yes	$60,323	$65,781	$72,218	$79,442	$87,358	$96,019	$105,261
90	No	$52,263	$59,053	$66,730	$75,088	$83,954	$93,355	$103,164
95	Yes	$52,152	$56,794	$62,603	$69,651	$77,753	$86,687	$96,350
95	No	$43,220	$49,378	$56,731	$65,295	$74,663	$84,403	$94,653
100	Yes	$46,773	$50,776	$55,839	$62,470	$70,723	$80,063	$90,154
100	No	$36,975	$42,462	$49,197	$57,491	$67,577	$78,139	$88,813

Single: Retiring at 66

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$77,162	$83,428	$90,253	$97,555	$105,352	$113,665	$122,374
85	No	$69,939	$77,188	$84,939	$93,073	$101,584	$110,550	$119,842
90	Yes	$62,641	$68,156	$74,585	$81,856	$89,807	$98,354	$107,522
90	No	$54,653	$61,463	$69,150	$77,522	$86,347	$95,643	$105,353
95	Yes	$53,663	$58,400	$64,268	$71,337	$79,443	$88,302	$97,846
95	No	$44,877	$51,072	$58,398	$66,924	$76,224	$85,953	$96,129
100	Yes	$47,936	$51,971	$57,091	$63,657	$71,928	$81,252	$91,246
100	No	$38,206	$43,713	$50,435	$58,691	$68,679	$79,230	$89,844

Single: Retiring at 67

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$81,135	$87,479	$94,352	$101,659	$109,450	$117,724	$126,386
85	No	$74,029	$81,343	$89,061	$97,176	$105,687	$114,538	$123,712
90	Yes	$64,961	$70,682	$77,197	$84,455	$92,373	$100,853	$109,957
90	No	$57,170	$64,093	$71,799	$80,063	$88,863	$98,058	$107,754
95	Yes	$55,162	$60,080	$66,004	$73,135	$81,225	$90,029	$99,516
95	No	$46,558	$52,867	$60,260	$68,784	$78,011	$87,584	$97,676
100	Yes	$49,004	$53,132	$58,374	$65,027	$73,270	$82,464	$92,373
100	No	$39,445	$45,024	$51,808	$60,077	$70,016	$80,419	$90,884

Single: Retiring at 68

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$85,564	$92,042	$98,926	$106,216	$113,984	$122,227	$130,763
85	No	$78,574	$85,953	$93,650	$101,759	$110,202	$118,970	$128,058
90	Yes	$67,523	$73,385	$80,029	$87,333	$95,169	$103,665	$112,651
90	No	$59,920	$66,923	$74,669	$82,932	$91,644	$100,780	$110,351
95	Yes	$56,842	$61,855	$67,898	$75,130	$83,149	$91,856	$101,263
95	No	$48,407	$54,772	$62,264	$70,760	$79,851	$89,354	$99,365
100	Yes	$50,171	$54,430	$59,740	$66,477	$74,652	$83,807	$93,624
100	No	$40,761	$46,414	$53,247	$61,542	$71,427	$81,623	$92,070

Single: Retiring at 70

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$96,226	$102,749	$109,759	$117,131	$124,892	$132,951	$141,371
85	No	$89,519	$96,872	$104,604	$112,623	$120,948	$129,555	$138,452
90	Yes	$73,582	$79,780	$86,519	$93,809	$101,659	$109,972	$118,849
90	No	$66,261	$73,447	$81,158	$89,374	$97,967	$106,964	$116,352
95	Yes	$60,561	$65,885	$72,226	$79,442	$86,552	$96,019	$105,261
95	No	$52,521	$59,072	$66,631	$75,079	$83,954	$93,355	$103,164
100	Yes	$52,773	$57,234	$62,761	$69,586	$77,762	$86,687	$96,350
100	No	$43,678	$49,474	$56,406	$64,705	$74,463	$84,420	$94,653

Single: Retiring at 75

Money lasting until age	Eligible for Age Pension?	Return on savings
Money lasting until age	Eligible for Age Pension?	2%	3%	4%	5%	6%	7%	8%
85	Yes	$140,053	$147,010	$154,076	$161,529	$169,153	$176,964	$184,989
85	No	$134,168	$141,653	$149,275	$157,124	$165,145	$173,346	$181,718
90	Yes	$96,226	$102,749	$109,759	$117,131	$124,892	$132,951	$141,371
90	No	$89,519	$96,872	$104,604	$112,623	$120,948	$129,555	$138,452
95	Yes	$73,864	$79,840	$86,502	$93,809	$101,659	$109,972	$118,849
95	No	$66,561	$73,472	$81,154	$89,372	$97,967	$106,964	$116,352
100	Yes	$61,663	$66,560	$72,430	$79,327	$87,376	$96,019	$105,261
100	No	$53,145	$59,216	$66,272	$74,460	$83,740	$93,358	$103,164

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.
Inflation costs are a 2% rise per year in cost of living plus an 1.2% additional rise per year in living standards
All returns are net of fees
Results are in today’s dollars
We recommend you also review the assumptions that MoneySmart list below their calculator

To learn more about how much super you need see the following SuperGuide articles:

To learn more about planning for your retirement see the following SuperGuide articles:

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Is $1.6 million in super enough to retire on?

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