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Is $1.6 million in super enough to retire on?

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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 Retirement Phase: A super guide to the $1.6m 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.

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 age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $70,731 $75,639 $81,153 $87,385 $94,249 $101,840 $110,132
No $52,237 $59,286 $67,131 $75,517 $84,384 $93,852 $103,730
90 Yes $70,731 $75,639 $81,153 $87,385 $94,249 $101,840 $110,132
No $52,237 $59,286 $67,131 $75,517 $84,384 $93,852 $103,730
95 Yes $56,634 $60,447 $65,050 $70,602 $77,203 $84,883 $93,765
No $36,715 $42,579 $49,802 $58,587 $68,373 $78,540 $89,263
100 Yes $52,618 $55,893 $60,151 $65,322 $71,751 $79,624 $88,829
No $32,097 $37,349 $43,958 $52,325 $62,963 $73,998 $85,081

Couple: Retiring at 65

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $83,851 $89,262 $95,223 $101,728 $108,653 $116,284 $124,306
No $66,594 $73,818 $81,601 $89,830 $98,466 $107,520 $116,941
90 Yes $70,870 $75,684 $81,153 $87,385 $94,249 $101,840 $110,132
No $52,620 $59,331 $67,017 $75,489 $84,384 $93,852 $103,730
95 Yes $62,900 $66,986 $71,841 $77,618 $84,351 $92,046 $100,570
No $43,562 $49,653 $56,936 $65,482 $74,999 $84,844 $95,158
100 Yes $57,341 $60,976 $65,365 $70,623 $77,184 $84,883 $93,765
No $37,305 $42,703 $49,323 $57,475 $67,533 $78,580 $89,283

Couple: Retiring at 66

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $87,260 $92,858 $98,921 $105,431 $112,484 $120,012 $128,042
No $70,296 $77,581 $85,353 $93,555 $102,152 $111,121 $120,445
90 Yes $73,015 $77,886 $83,525 $89,762 $96,651 $104,228 $112,471
No $54,940 $61,790 $69,495 $77,887 $86,760 $96,118 $105,904
95 Yes $64,229 $68,414 $73,441 $79,329 $86,056 $93,709 $102,226
No $45,155 $51,340 $58,688 $67,212 $76,649 $86,385 $96,596
100 Yes $58,250 $62,000 $66,487 $71,888 $78,472 $86,198 $95,011
No $38,479 $43,951 $50,618 $58,793 $68,811 $79,663 $90,294

Couple: Retiring at 67

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $91,154 $96,862 $102,996 $109,560 $116,620 $124,150 $132,079
No $74,403 $81,752 $89,527 $97,676 $106,221 $115,114 $124,345
90 Yes $75,279 $80,379 $86,087 $92,350 $99,335 $106,855 $115,064
No $57,448 $64,416 $72,057 $80,517 $89,327 $98,577 $108,278
95 Yes $65,671 $70,062 $75,130 $81,112 $87,886 $95,542 $104,011
No $46,875 $53,143 $60,552 $69,114 $78,379 $88,043 $98,176
100 Yes $59,253 $63,111 $67,655 $73,184 $79,754 $87,548 $96,268
No $39,731 $45,271 $51,987 $60,181 $70,144 $80,837 $91,389

Couple: Retiring at 68

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $95,494 $101,272 $107,540 $114,145 $121,257 $128,670 $136,645
No $78,973 $86,385 $94,150 $102,273 $110,757 $119,569 $128,670
90 Yes $77,846 $83,088 $88,886 $95,215 $102,163 $109,654 $117,911
No $60,212 $67,274 $75,016 $83,350 $92,096 $101,273 $110,889
95 Yes $67,264 $71,710 $76,996 $83,053 $89,887 $97,462 $105,854
No $48,709 $55,080 $62,547 $71,070 $80,255 $89,827 $99,865
100 Yes $60,352 $64,324 $68,969 $74,594 $81,243 $88,886 $97,639
No $41,062 $46,671 $53,440 $61,637 $71,553 $82,080 $92,544

Couple: Retiring at 70

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $105,869 $111,874 $118,255 $125,035 $132,079 $139,554 $147,501
No $89,971 $97,363 $105,132 $113,157 $121,555 $130,172 $139,150
90 Yes $83,851 $89,262 $95,223 $101,728 $108,653 $116,284 $124,306
No $66,582 $73,818 $81,601 $89,830 $98,466 $107,520 $116,941
95 Yes $70,870 $75,684 $81,153 $87,385 $94,249 $101,840 $110,132
No $52,875 $59,405 $66,968 $75,472 $84,384 $93,852 $103,730
100 Yes $62,996 $67,028 $71,834 $77,622 $84,351 $92,046 $100,570
No $44,007 $49,745 $56,595 $64,783 $74,575 $84,812 $95,157

Couple: Retiring at 75

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $149,187 $155,736 $162,404 $169,430 $176,663 $184,113 $191,753
No $134,895 $142,354 $150,045 $157,915 $165,951 $174,217 $182,635
90 Yes $105,869 $111,874 $118,255 $125,035 $132,137 $139,554 $147,501
No $89,990 $97,363 $105,132 $113,157 $121,555 $130,172 $139,150
95 Yes $84,052 $89,354 $95,223 $101,728 $108,653 $116,284 $124,306
No $67,036 $73,879 $81,506 $89,789 $98,466 $107,520 $116,941
100 Yes $71,838 $76,272 $81,383 $87,397 $94,249 $101,840 $110,132
No $53,604 $59,555 $66,465 $74,494 $83,761 $93,798 $103,727

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
2% 3% 4% 5% 6% 7% 8%
85 Yes $59,970 $65,762 $72,356 $79,653 $87,724 $96,397 $105,712
No $52,251 $59,284 $67,131 $75,517 $84,434 $93,850 $103,731
90 Yes $51,496 $56,470 $62,648 $69,888 $78,044 $87,044 $96,765
No $43,072 $49,559 $57,231 $65,847 $75,059 $84,842 $95,163
95 Yes $46,066 $50,288 $55,730 $62,751 $71,102 $80,410 $90,552
No $36,716 $42,579 $49,807 $58,621 $68,371 $78,540 $89,211
100 Yes $42,226 $45,905 $50,727 $57,259 $65,751 $75,530 $86,095
No $32,092 $37,348 $43,958 $52,326 $62,963 $74,001 $85,083

Single: Retiring at 65

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $73,750 $79,909 $86,751 $94,123 $102,017 $110,428 $119,341
No $66,594 $73,805 $81,601 $89,831 $98,460 $107,520 $116,938
90 Yes $60,524 $65,940 $72,380 $79,653 $87,724 $96,397 $105,712
No $52,595 $59,328 $67,005 $75,492 $84,434 $93,850 $103,731
95 Yes $52,320 $56,949 $62,714 $69,747 $78,043 $87,044 $96,765
No $43,569 $49,653 $56,922 $65,486 $74,999 $84,842 $95,163
100 Yes $47,000 $50,973 $56,007 $62,543 $70,858 $80,410 $90,552
No $37,305 $42,704 $49,324 $57,474 $67,532 $78,580 $89,284

Single: Retiring at 66

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $77,313 $83,629 $90,461 $97,864 $105,765 $114,116 $122,924
No $70,277 $77,582 $85,364 $93,560 $102,151 $111,069 $120,444
90 Yes $62,678 $68,261 $74,777 $82,128 $90,064 $98,749 $107,981
No $54,941 $61,768 $69,495 $77,863 $86,767 $96,119 $105,899
95 Yes $53,701 $58,482 $64,401 $71,513 $79,684 $88,652 $98,276
No $45,156 $51,324 $58,687 $67,224 $76,647 $86,370 $96,612
100 Yes $48,022 $52,086 $57,240 $63,821 $72,148 $81,569 $91,651
No $38,480 $43,951 $50,614 $58,790 $68,812 $79,662 $90,293

Single: Retiring at 67

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $81,271 $87,739 $94,644 $102,004 $109,855 $118,152 $126,951
No $74,403 $81,753 $89,527 $97,667 $106,184 $115,113 $124,344
90 Yes $65,026 $70,766 $77,387 $84,737 $92,741 $101,268 $110,425
No $57,469 $64,416 $72,154 $80,516 $89,330 $98,594 $108,261
95 Yes $55,243 $60,176 $66,163 $73,363 $81,512 $90,371 $99,938
No $46,875 $53,144 $60,553 $69,082 $78,398 $87,989 $98,139
100 Yes $49,129 $53,288 $58,518 $65,176 $73,508 $82,826 $92,750
No $39,730 $45,271 $51,989 $60,181 $70,145 $80,805 $91,393

Single: Retiring at 68

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $85,759 $92,262 $99,217 $106,550 $114,454 $122,670 $131,356
No $78,952 $86,370 $94,151 $102,277 $110,756 $119,559 $128,655
90 Yes $67,641 $73,560 $80,252 $87,607 $95,543 $104,062 $113,128
No $60,213 $67,274 $75,046 $83,351 $92,096 $101,289 $110,883
95 Yes $56,891 $61,960 $68,091 $75,285 $83,413 $92,246 $101,665
No $48,722 $55,080 $62,546 $71,096 $80,264 $89,830 $99,865
100 Yes $50,328 $54,604 $59,917 $66,614 $74,940 $84,091 $93,972
No $41,058 $46,671 $53,439 $61,637 $71,553 $82,077 $92,554

Single: Retiring at 70

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $96,460 $103,054 $110,126 $117,536 $125,316 $133,513 $141,965
No $89,958 $97,361 $105,085 $113,176 $121,556 $130,207 $139,150
90 Yes $73,750 $79,909 $86,751 $94,123 $102,017 $110,428 $119,341
No $66,582 $73,805 $81,601 $89,831 $98,460 $107,520 $116,938
95 Yes $60,736 $66,053 $72,347 $79,653 $87,724 $96,397 $105,712
No $52,854 $59,405 $66,968 $75,437 $84,434 $93,850 $103,731
100 Yes $53,017 $57,497 $62,942 $69,751 $77,983 $87,043 $96,765
No $44,009 $49,746 $56,595 $64,790 $74,567 $84,843 $95,112

Single: Retiring at 75

Money lasting
until age		 Eligible for
Age Pension?		 Return on savings
2% 3% 4% 5% 6% 7% 8%
85 Yes $140,553 $147,460 $154,729 $162,197 $169,854 $177,725 $185,776
No $134,883 $142,363 $150,045 $157,916 $165,972 $174,217 $182,635
90 Yes $96,460 $103,054 $110,126 $117,536 $125,316 $133,513 $141,965
No $89,989 $97,361 $105,085 $113,176 $121,556 $130,207 $139,150
95 Yes $74,244 $80,112 $86,756 $94,123 $102,017 $110,428 $119,341
No $67,036 $73,847 $81,489 $89,782 $98,460 $107,520 $116,938
100 Yes $62,121 $66,949 $72,689 $79,500 $87,568 $96,396 $105,712
No $53,603 $59,555 $66,465 $74,494 $83,755 $93,802 $103,694

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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IMPORTANT: SuperGuide does not provide financial advice. All information on SuperGuide.com.au is intended only as a guide. It is important to seek professional accredited financial advice when considering whether the information is suitable to your personal circumstances. 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