How much do you really need to retire? It’s probably a lot less than $1 million

Every few months, someone in the superannuation industry declares that Australians now “need” around A$1 million to retire comfortably. It’s a big, scary number.

But consumer advocates say most people can retire with far less.

Independent estimates suggest something closer to $322,000 is enough for many retirees who own their own home. So who’s right – and what assumptions drive these wildly different targets?

What the two key benchmarks say

Two key organisations publish retirement benchmarks in Australia, and they paint very different pictures.

The Association of Superannuation Funds of Australia (ASFA), the lobby group for the super industry, publishes two lifestyle options in its 2026 Retirement Standard. This was recently updated to reflect a higher cost of living:

Modest retirement: Covers the basics – a budget car, basic private health insurance, one domestic holiday a year. This costs around $35,503 a year for a single homeowner, and the age pension (the regular government payment available to eligible retirees aged 67+) covers most of it. You’d only need around $110,000 in super.

Comfortable retirement: Includes top-level private health insurance, a newer car, regular dining out, and overseas travel. ASFA puts this at around $54,240 a year for a single homeowner, requiring roughly $630,000 in super. For couples, it’s about $77,375 a year, needing around $730,000.

These are significant sums – but well below $1 million.

Then there’s Super Consumers Australia, an independent consumer group that recommends a substantially lower amount.

Rather than imagining a lifestyle, the consumer group uses actual Australian Bureau of Statistics data on what retirees really spend. Its headline finding: a typical single retiree spending at the middle level out of three options needs just $322,000 in super.

Remember, retirees don’t have work-related expenses and they also enjoy a range of discounts on things such as council rates, electricity and medicines, which can really add up.

Part of the difference is the industry body, ASFA, has an interest in encouraging people to contribute more to their super. Its “comfortable” standard is higher than most Australians’ standard of living while working.

Why the numbers differ

The gap comes down to what each benchmark is measuring.

ASFA describes an aspirational lifestyle. Super Consumers describes what real retirees actually spend.

The age pension does a lot of the heavy lifting either way. At Super Consumers’ medium spending level, about 67% of retirement income comes from the age pension, and the remainder from your super balance.

But here’s a crucial new factor: the age pension isn’t keeping up with what retirees actually spend money on.

While the pension is indexed to inflation, retirees’ major expenses – insurance, rates, utilities, health care and food – have been rising faster than general consumer prices.

That means retirees who rely heavily on the pension are seeing more financial pressure than the headline inflation numbers suggest.

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There’s a housing catch

Here’s the crucial fine print: every one of these benchmarks assumes you own your home outright when you retire.

That assumption is becoming shaky. Research shows the share of Australians aged 55–64 still carrying mortgage debt has tripled since 1990, and the average debt for that age group now exceeds $230,000. More than one in three Millennials expect to retire with a mortgage still running.

The ASFA budgets are built on the assumption of full home ownership. That means they do not include rent, mortgage repayments or major housing costs.

If you’re renting or carrying a mortgage into retirement, the required super balance can rise dramatically. ASFA estimates renters need $340,000–385,000 for a modest lifestyle – more than a homeowner needs for a comfortable one.

Super Consumers Australia presents a similar gap, estimating that a renter requires about $659,000 in superannuation, compared with only $322,000 for a homeowner.

With more people retiring with mortgage debt today than previous generations, both key benchmarks may underestimate housing-related stress for future retirees.

Planning for retirement starts with a realistic budget of what you will spend.

The gender gap in retirement

Retirement targets are often discussed as if everyone starts from the same position. They don’t.

Australian women retire with about 25% less super than men. The gender pay gap (currently around 21%) compounds over a working life into a much larger retirement savings gap. Women also live longer on average, meaning their money needs to stretch further.

The government began paying super on parental leave in July 2025 – a meaningful step forward. But the gap remains significant.

What this means for you

There’s no single right number. But ask yourself these questions before chasing any benchmark:

• will you own your home outright?

• do you want to travel or are you a homebody?

• are you planning for one income or two?

The gap between ASFA comfortable and Super Consumers medium is $8,497 a year in spending – but nearly $308,000 in required super. That difference is almost entirely lifestyle choice.

For a personalised estimate, the free MoneySmart Retirement Planner is a good starting point, or call the government’s free Financial Information Service on 132 300.

The $1 million figure isn’t evidence-based for most Australians. But the lower benchmarks all carry the same caveat: they assume you’re a homeowner. As more people retire with debt or as renters, even those more modest numbers may understate what you actually need.

Disclaimer: This article provides general information only and is not intended as financial advice.

Source: Conversation