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Home / Plan your retirement / How much super do I need? / Is $1.6 million in super enough to retire on?

Is $1.6 million in super enough to retire on?

February 11, 2020 by Barbara Drury 2 Comments

Reading time: 3 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 will be indexed for inflation in $100,000 increments. Learn 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 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). 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.


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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 $70,915 $75,829 $81,264 $87,368 $94,142 $101,642 $109,841
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $83,942 $89,354 $95,264 $101,652 $108,541 $116,032 $123,994
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $87,419 $92,850 $98,862 $105,331 $112,295 $119,750 $127,673
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $91,239 $96,853 $102,933 $109,443 $116,418 $123,858 $131,748
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $95,593 $101,309 $107,438 $113,968 $121,029 $128,417 $136,301
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $105,854 $111,824 $118,173 $124,777 $131,863 $139,250 $147,078
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $148,978 $155,403 $162,118 $168,951 $176,154 $183,552 $191,183
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $59,946 $65,693 $72,160 $79,442 $86,552 $96,019 $105,261
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $73,592 $79,780 $86,519 $93,809 $101,659 $109,972 $118,849
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $77,162 $83,428 $90,253 $97,555 $105,352 $113,665 $122,374
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $81,135 $87,479 $94,352 $101,659 $109,450 $117,724 $126,386
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $85,564 $92,042 $98,926 $106,216 $113,984 $122,227 $130,763
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $96,226 $102,749 $109,759 $117,131 $124,892 $132,951 $141,371
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
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
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
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

2%

3%

4%

5%

6%

7%

8%

85

Yes $140,053 $147,010 $154,076 $161,529 $169,153 $176,964 $184,989
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
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
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
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
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Learn more about how much super is enough in the following SuperGuide articles:

How to use the MoneySmart Retirement Planner

January 21, 2021

Super to income Reckoner

February 18, 2020

Income from super Reckoner

February 18, 2020

Is $500,000 in super enough to retire on?

February 11, 2020

Is $750,000 in super enough to retire on?

February 11, 2020

Is $1 million in super enough to retire on?

February 11, 2020

Is $2 million in super enough to retire on?

February 11, 2020

Is $3.2 million in super enough for a couple to retire on?

February 11, 2020

How much super do I need to retire on $40,000 a year?

February 11, 2020

How much super do I need to retire on $60,000 a year?

February 11, 2020

How much super do I need to retire on $80,000 a year?

February 11, 2020

How much super do I need to retire on $100,000 a year?

February 11, 2020

How much super do I need to retire?

February 11, 2020

How accurate are ‘retirement estimates’? 7 assumptions you need to understand

November 21, 2019

Falling behind with your super? How your super balance compares

October 2, 2019

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

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Reader Interactions

Comments

  1. Ian says

    May 23, 2019 at 7:01 pm

    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
    • SuperGuide says

      May 27, 2019 at 2:49 pm

      Hi Ian – The assumption is that because their assets are being drawn down (ie spent) in retirement, this reduces their asset levels to such a point that they subsequently become eligible for the Age Pension. Learn more about how the Age Pension assets test works.
      Best wishes
      The SuperGuide team

      Reply

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