Is $700,000 in super enough to retire on?

If $500,000 doesn’t feel like enough, but a round million is out of reach, you might wonder whether $700,000 in super would hit the mark for the retirement lifestyle you’re looking for. The truth is that a comfortable retirement will look different for everyone, depending on your desired lifestyle and goals, and most Australians retire with less than $700,000.

Using the Australian Securities and Investments Commission’s (ASIC) Moneysmart retirement planner, we have calculated how much income a retirement balance of $700,000 might 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, 67, 70 and 75, to show the impact of delaying retirement.
• How long you want your money to last. We run the numbers for ages 85, 90, 95 and 100.
• How you invest your super balance. An option with a higher allocation to growth assets will offer greater long-term growth prospects. This higher return on investment can help your superannuation savings last longer or provide a higher level of income, despite additional volatility.

The results assume you will withdraw the entire balance of your account-based pension by the target age. Once the balance is exhausted, future income will come from the Age Pension alone.

When interpreting the results of any retirement calculator, it is important to consider the assumptions used. The Moneysmart retirement planner builds in the same investment return and inflation rate for every year, but reality is not so consistent. True variation over the years means the retirement income your balance will provide is likely to be significantly different in the real world.

We have used the default calculator settings, which assume you are a homeowner, have only $25,000 in assets outside super and are eligible for the Age Pension. All figures are in today’s dollars (adjusted for inflation) and include the impact of estimated super fund fees.

We recommend you review the assumptions and further information about the calculator on ASIC’s website.

Where to go for more

We hope the figures in the tables below will get you thinking, but remember that this data represents a small selection of possible outcomes and cannot substitute for a personalised calculation.

To build a picture of your own circumstances, use a good-quality retirement projection tool such as Mercer’s retirement income simulator, QSuper’s super projection or retirement calculator or the Moneysmart retirement planner that we used here. Make sure you include as much information as possible about your circumstances, including investments outside super and review and adjust the assumptions, including fees, to ensure your projection is as meaningful as it can be.

A key part of any retirement plan, and essential to using the calculator tools mentioned above, is to consider how long your income will need to last. As a guide, we are grateful to Optimum Pensions for allowing us to share their easy-to-use lifetime estimator calculator with you.

To help you navigate these and other free retirement planning tools, SuperGuide has developed a range of video demonstrations. You can find these ‘how-to’ guides in the super and retirement calculators section.

Income generated from a $700,000 retirement super balance

The investment options included in the tables below are Cash (4.3% annual return), Conservative (5.6% annual return), Moderate (6.3% annual return), Balanced (6.7% annual return) and Growth (7% annual return).

Scenarios for couples

First, let’s look at the estimated annual income under various scenarios for a couple with a combined balance of $700,000 on retirement, which they each transfer into a super account-based pension.