Opinion
For years, $1 million has been the number people carry around in their heads as the amount you need to have a good retirement. Get to that and you’ve done well in life. You’ll be comfortable, and you won’t need to worry.
Piffle.
What I’m seeing now is that more people are getting close to that figure, or even reaching it, and instead of feeling secure, they feel uncertain. They’re not stressed, and they’re not struggling, but they’re certainly not as confident as they expected to be that they have enough.
And the reason is pretty simple. The number hasn’t kept up with how retirement actually works any more.
A million dollars in super still puts you in a strong position. But when you translate it into income, it starts to look very different from the old idea of being “set for life”.
Using a fairly standard drawdown approach of 5 or 6 per cent, you’re probably looking at somewhere around $50,000 to $60,000 a year in the early years. Moreover, most couples will receive only a small age pension at this level, which cuts out entirely once assets move above about $1.085 million. Singles lose access to the age pension much earlier, at around $722,000.
Doubling your super doesn’t necessarily double your lifestyle.
Combine the two, and you’re typically looking at something more in the order of $65,000 to $75,000 a year for a couple, depending on how you draw your super and what other assets you hold. A single person might be targeting $55,000 to $65,000, often without much access to the pension unless they deliberately run their super down over time.
Compare that with the Association of Superannuation Funds benchmark for a comfortable retirement, and you quickly find it’s tight, with couples needing $77,375 and singles needing $54,840.
That’s the reality of what $1 million looks like today. It’s a decent, workable income. But it’s not the kind of money that makes you feel like you can stop thinking about your decisions.
To see how this plays out in real life, it helps to compare two very typical situations. Take a couple in their early 60s with around $500,000 in super and their home paid off.
At that level, they’re still close to, or on, the full age pension, which is a bit over $47,000 a year. They draw around $20,000 to $30,000 from their super, and together that gives them an income somewhere in the low to mid-$70,000s.
It’s not extravagant, but it’s healthy. The pension does a lot of the heavy lifting, and their super tops it up.
Now compare that to a couple with $1 million in super. On paper, they’re in a much stronger position. They’ve doubled their savings. They might draw $50,000 to $60,000 a year from their super, but because their assets are higher, most of their age pension has tapered away. What’s left is a relatively small top-up of $6000-7000.
So their total income often lands somewhere in the $60,000 to $70,000 range.
They’ve got more capital behind them, and more flexibility over time, but the day-to-day income doesn’t feel dramatically different. If anything, it might be lower than someone with $500,000. That can really surprise people.
Doubling your super doesn’t necessarily double your lifestyle. In this part of the system, it can feel like it barely shifts it at all. And part of the reason for that sits in how the system actually works.
If you’ve got very little in assets, the age pension does a really solid job of providing you with a base layer of income. A couple can receive a bit over $47,000 a year including supplements, while a single receives around $31,000. It’s not extravagant, but it’s clear, reliable, and it gives you that base to layer other income on top of.
At the other end, if you’ve got many assets, you’re largely self-funded. You’ve got flexibility, and you’re not really relying on the system at all.
It’s the middle where things start to feel less certain, and this is precisely where many people now sit, around that $1 million mark when you include super and other savings, particularly in couples.
You’ve got enough to start losing the pension, but not enough for your own savings to fully take over or even make up that gap at standard drawdown rates. So as your balance grows, it doesn’t feel like a clean step up. You’re drawing a bit more from your super, but at the same time your pension is quietly tapering away in the background.
That taper is steady rather than sudden, but it adds up. And when you layer in the income test, where your savings are assumed to be earning a set rate through deeming whether they actually are or not, it becomes even less obvious what you’re really gaining as your balance increases.
So the jump from $500,000 to $1 million in super, which looks significant on paper, often feels much more minuscule in real life. And that’s the bit that catches people off guard.
At the same time, retirement itself has changed.
This generation isn’t planning to wind things down and sit still. They want to travel, stay active, spend time with family, and actually enjoy a phase of life that might run for 25 or 30 years.
Spending doesn’t necessarily fall away. Often, it just changes shape. So when people look at their numbers, they’re not just asking, “Can we get by?” They’re asking, “Can we live the way we want, and keep doing it if things don’t go perfectly?”
Those are two very different questions. And underneath all of this is a bigger mismatch. We still talk about retirement as if it’s built around a single number, as if there’s a clean point where you arrive and everything is sorted. But most people don’t retire like that any more.
It’s not a clean stop. It’s more of a gradual shift. People ease back from full-time work, pick up part-time income, adjust their spending, and draw from different sources at different times. It’s not one decision. It’s a series of them. And it changes as life changes.
Once you start looking at it that way, $1 million stops being a finish line. It’s just one number, at one point along the path.
The people who seem most comfortable aren’t necessarily the ones with the highest balances or the ones with a million bucks. They’re the ones who understand how the system works and how their super, the age pension and their spending all fit together.
So yes, $1 million still matters. It gives you options, and it gives you a base to work from. Don’t be disappointed if you have that! Just know it’s not the point where everything clicks into place any more. It’s the point where you need to understand how to make it work.
Bec Wilson is author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
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Bec Wilson is the author of How To Have An Epic Retirement and writes a weekly newsletter for pre- and post-retirees at epicretirement.net.
