Super balance needed at retirement.
Super balance needed
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Drawn from super each year
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Start from the spending, not from a magic number
Headlines love to quote a single super target, often around $595,000 for a single or $690,000 for a couple under the ASFA comfortable benchmark. The trouble is that a number only means something once you anchor it to how much you plan to spend, how long you expect to live off it, and how much the Age Pension chips in. This calculator works backwards from your own spending. You tell it the lifestyle you want, what you realistically expect from the pension, and it tells you the lump sum your super needs to reach.
The Age Pension does a lot of the heavy lifting
The single biggest reason your target is lower than you fear is the Age Pension. Your super only has to fund the gap between your target spend and your expected pension. So if you want $60,000 a year and the pension provides $15,000, your portfolio is responsible for $45,000, not the full $60,000. The pension is income and asset tested, so a larger balance reduces it, but for most retirees with a paid off home some part pension remains. Be realistic with the figure you enter, because overstating the pension understates the super you need.
The drawdown maths behind the result
The tool treats your super as a pool that has to deliver an inflation adjusted income for a set number of years while earning a real return. That is the present value of an annuity formula. A real return is the return after inflation, which is why a modest 3.5 percent is sensible even when nominal returns look higher. Funding spending that keeps pace with inflation for decades requires a meaningfully larger pool than simply multiplying the annual draw by the number of years.
Funding $60,000 a year for 30 years
Run the default scenario. You want $60,000 a year, expect $15,000 from the Age Pension, plan for a 30 year retirement, and assume a 3.5 percent real return on your remaining balance.
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You need roughly $827,642 in super to draw $45,000 a year, indexed to inflation, for three decades. The chart shows how that balance is consumed: returns refill the pool while withdrawals empty it, until it lands near zero at year 30.
A reality check on longevity and sequence risk
This is a planning estimate, not a guarantee, and two risks sit outside the formula. The first is longevity. The model assumes a fixed 30 years, but a 65 year old today has a real chance of living past 90, so consider stretching the horizon if longevity runs in your family. The second is sequence of returns risk: a poor run of markets in the first few years of retirement does more damage than the same run later, because you are selling assets while they are down. A common defence is to hold a cash or conservative buffer of a year or two of spending so you are not forced to sell growth assets in a slump. Treat the output as the target to build toward, then stress test it by nudging the horizon out and the return down.
Frequently asked questions
Is super income actually tax free in retirement?
For most people over 60 drawing from a taxed super fund, both the pension payments and the investment earnings inside an account based pension are tax free, up to the transfer balance cap that limits how much you can move into the retirement phase. That is why the calculator works in pre tax target spend without applying a tax rate to the drawdown.
What real return should I assume?
A balanced super fund has historically delivered something in the range of 3 to 4 percent above inflation over the long run, which is why 3.5 percent is a sensible middle estimate. A more conservative allocation in retirement might justify a lower figure. Lower the real return in the tool and watch the required balance climb, which shows how sensitive the target is to this single input.