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For years, $1 million has been the number people carry around in their heads as the amount you need to retire comfortably. Do that and you’ve done well in life. You will be fine, and you won’t need to worry.
Piffle.
What I see now is that more and more people are approaching that figure, or even reaching it, and instead of feeling safe, they feel insecure. They don’t have stress, and they don’t have problems, but they certainly don’t have the courage that they expected to have enough.
And the reason is very simple. The number doesn’t track how retirement works anymore.
A million dollars in super still puts you in a good position. But when you translate that into income, it starts to look very different from the old idea of ”saving for life”.
Using the typical 5 or 6 percent takeover method, you’re probably looking at somewhere around $50,000 to $60,000 a year in the early years. In addition, most couples will receive a small age pension at this level, which is reduced completely once assets move above $1.085 million. Singles lose access to the age pension the earliest, at around $722,000.
Maximizing your quality isn’t about doubling your lifestyle.
Combine the two, and you’re typically looking at something more in the order of $65,000 to $75,000 per year for a couple, depending on how you draw your best and what other assets you hold. One person might be aiming for $55,000 to $65,000, often without much access to a pension unless they reduce their maximum over time.
Compare that to the Union Superannuation rate for a comfortable retirement, and you quickly see it’s not easy, 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, working 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 common situations. Take a couple in their 60s with almost $500,000 in super and their house paid off.
At that level, they are still close to, or above, the full age pension, which is more than $47,000 a year. They pull in around $20,000 to $30,000 from their best, and together that puts them somewhere in the low to mid $70,000 range.
It’s not messy, but it’s healthy. Pensions do a lot of the heavy lifting, and their improvements add to it.
Now compare that to a couple with $1 million in super. On paper, they are in a stronger position. They have doubled their savings. They may draw $50,000 to $60,000 a year from their elders, but because their assets are higher, their large age pensions are reduced. All that’s left is a small addition of $6000-7000.
So their gross income often falls somewhere in the $60,000 to $70,000 range.
They have more capital behind them, and more flexibility over time, but the daily income doesn’t feel much different. If anything, it may be less than someone with $500,000. That can really surprise people.
Maximizing your quality isn’t about doubling your lifestyle. In this part of the system, it may feel like it is not changing at all. And part of the reason for that lies in how the system works.
If you have very little wealth, the age pension does a solid job of providing you with a basic layer of income. A married couple can receive more than $47,000 a year including supplements, while a single person receives around $31,000. It’s not extravagant, but it’s clear, reliable, and gives you that foundation to base other income on.
On the other hand, if you have a lot of assets, you are financing yourself. You have flexibility, and you are not dependent on the system at all.
It’s in the middle where things start to get a little more certain, and this is where most people now sit, around that $1 million mark when you include the best savings and others, especially for couples.
You have enough to start losing the pension, but not enough for your own savings to fully absorb or even make up the gap with the standard reduction rates. So as your balance grows, it doesn’t feel like a clean step. You are drawing more from your best, but at the same time your pension is quietly disappearing into the background.
The taper is steady rather than sudden, but it adds up. And when you put in an income test, where your savings are considered to be earning a set amount based on whether or not it’s true, it becomes even more obvious what you’re earning as your balance grows.
So jumping from $500,000 to $1 million in super, which looks significant on paper, often feels much less in real life. And that’s the thing that grabs people.
At the same time, retirement itself has changed.
This generation has no plans to end things and stay quiet. They want to travel, stay active, spend time with family, and really enjoy a phase of life that can last 25 or 30 years.
Consumption does not necessarily fall away. Most of the time, it just changes shape. So when people look at their numbers, they’re not just asking, “Can we survive?” They ask, “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 the biggest mismatch. We still talk about retirement as if it’s built around a number one, as if there’s a clean place where you arrive and everything is planned. But most people don’t retire like that anymore.
It is not a clean station. It is more than a gradual change. People easily return from full-time work, take part-time income, adjust their spending, and earn from different sources at different times. It is not a single decision. It’s their series. And it changes as life changes.
Once you start looking at it that way, $1 million stops being the finish line. It’s just one number, at a time along the way.
The people who seem the most comfortable are not necessarily the ones with the highest scales or those with a million dollars. They are the ones who understand how the system works and how their welfare, age pension and spending all fit together.
So yes, $1 million is still important. It gives you options, and it gives you a base to work from. Don’t despair if you have! Just know that it’s not where everything clicks into place anymore. It is the step where you need to understand how to make it work.
Bec Wilson is a best-selling author How to have an Epic Retirement and newly released Prime Time: 27 Lessons for the New Middle Ages. He writes a weekly newsletter for epicretirement.net and host of Great Time podcast.
- The advice given in this article is general and is not intended to influence readers’ decisions about investments or financial products. They should seek their own professional advice that takes into account their 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.
