Why you only need $275k in super to retire


Published on

Building up enough super for retirement may not be as daunting as it seems - you certainly don't need the often quoted $1 million.

In fact, retirees with modest savings can be better off than those with more than twice as much.

The secret is to hit the "sweet spot", where the return from your nest egg combines with the full age pension to fund a reasonable lifestyle.

why you only need $275k in super retirement pension

For a home-owning single the magic savings figure is $275,000 and for a couple it's $400,000.

We consulted the experts to show how it can be done.

There is a new dilemma facing Australians planning for retirement.

For the 80% who fund their retirement years with a combination of superannuation and the age pension, the rules introduced in January have some harsh consequences.

Combining the age pension with super is harder for home-owning couples with superannuation balances between $400,000 and $1 million.

This is because eligibility tapers off quite sharply. There is a no man's land where your ability to access the age pension plunges and your superannuation income is not high enough to replace it.

What this means is that if you have modest savings you will get the age pension and do much better than someone with a lot more in super.

For example, a couple who have between $400,000 and $1 million will be worse off in terms of income than a couple with $400,000, because at that point they lose $3 a fortnight in the age pension for every $1000 above the threshold.

The optimum point - where your superannuation combines with the full age pension - is the retirement sweet spot.

The actual amount will come as a pleasant surprise for both singles and couples who thought their savings were inadequate.

The sweet spot is rarely talked about.

Financial planners are still coming to grips with the implications of the new assets test.

It could be discouraging for couples who have saved hard to get between $400,000 and $1 million.

The wider implications for the whole superannuation system are unclear at this stage.

Get stories like this in our newsletters.

Related Stories


Susan has been a finance journalist for more than 30 years, beginning at the Australian Financial Review before moving to the Sydney Morning Herald. She edited a superannuation magazine, Superfunds, for the Association of Superannuation Funds of Australia, and writes regularly on superannuation and managed funds. She's also author of the best-selling book Women and Money.
June 18, 2017 8.56am

These constant changes to people's super is making retirement planning impossible or at least stressful for many.
So this year the sweet spot maybe $275k, but what if next year it becomes $350k or $500k.
Average people who have been working and saving for 30+ years aren't able to make rapid corrections to their long term super in these sort of timeframes.
Again the middle income workers are getting screwed.

July 7, 2017 10.55am

your right Basil, the problem with super is the Govt keeps changing the rules. However, what it does highlight is those approaching retirement in the next 2-5 years have a big decision to make if they have super balances between $250k and $700k. Makes a mockery of the reason we have super.

July 22, 2017 4.44am

What if you don't have a home???

December 13, 2017 4.20pm

As a 40 year old with $379k combined super with my wife and currently maxing out our contributions, I cannot understand for the life of me why (if we hit $1m) we will be no better off than someone with $400k taking a pension. IT MAKES NO SENSE to me. If someone has $400k in super they should be using that first (with no pension) then when they get to a point (say $100k) then a pension should kick in!!

Kerri Moore
December 13, 2017 4.56pm

This article is not quite right because the $400,000 must only be cash so you cant own a car or have any home furnishings which would be approx $20,000 to $30,000 thus dropping your money producing income down to $370,000 minus the obliquely 5% gives you $ 18,500 then the aged pension of $32,727 equals $51,227

December 14, 2017 8.21am

I agree Ben. But maybe make the figure a little higher than $100 k. Our taxes are subsidising those that rort the system. I know of people who are going to MAKE SURE they get a full pension by going on a spending spree before they are entitled to get the pension. It SO wrong.

December 27, 2017 6.03pm

We are constantly reminded through our super and articles on funding retirement we need to "plan". Then the rules change and the "plan" has become a trap. No one on wages can make short term corrections for years of saving according to the plan - so it is going to leave many short of money and lead to some making desperate decisions - like spending inappropriately to fit in with the new rules, and be able to claim a pension with all of its benefits. It seems like all the saving has been pointless and there are others who have the benefit of being able to claim a British pension and an Australian pension - while us born in Australia who have saved hard are being penalised. Its easy to see why some now take the attitude to spend it all and enjoy it and then claim a pension. Is this what the government wants as it seems contrary to all of their advice to plan and SAVE SAVE.

January 2, 2018 9.57am

I dont think people understand what is happening here, we are told to plan for retirement and make sure we have a considerable amount saved for retirement & then the rules keep changing. These puppets in Gov't need to really have a good look at themselves & try to understand that people have had enough of their crap rules. We try & do the right thing and get penalised, no wonder people are rorting the system they have no choice with these puppets. Why dont they ask Paul Keating for some advise on what to do, he was the only one who had some vision & brains for future savings for the worker. This Gov't needs to be all thrown out & start fresh.

January 10, 2018 5.57pm

Before acting on this article stating that "you only need $275k in super to retire" always remember that the government can at any time make the income and assets test more onerous thus excluding even more people from qualifying for a full or part old age pension. In other words the full or part pension is not guaranteed (and neither are the returns on Super). You need to make provision for the possibility of the loss of a full or part pension and an extended period of below average returns on Super. The next stock market crash may be greater than the 56% fall during the GFC and may last longer than the 17 months of the GFC. The USA market took 25 years before it went above the 1929 highs.

February 8, 2018 9.43pm

Well I won't be relying on super and the pension to fund my retirement! A quarter of my retirement income will come from the super, 3/4 will come from my property income. Who knows even in 20 years time whether if be eligible for a pension. I've taken matters into my own hands. What's with this entitlement mentality. Find your own retirement!

Carolyn Reid
April 4, 2021 11.11am

That's exactly what I am doing. Don't rely on any govt. handouts. They will only take it back somehow.

April 21, 2018 3.13pm

I think just be flexible and do what you have to do to survive and be comfortable. If people who have not worked a day in their lives are going to be qualifying for a pension regardless, then all you have to do is find that sweet spot that will benefit you. Spend your super until you hit $400K as couple (the sweet spot) Thats the way to go.!!

Ian Ross
July 3, 2018 2.14pm

No actually, because the article does specify that the $400K is in an account-based pension

Judi B
July 26, 2018 11.53am

Well, my husband & I are about to put it to the test. He's finishing work in 2 weeks, when he turns 60. We have a total of $350k in super & savings, which we'll be using until I start getting the pension in less than 2 years. In the meantime, our money will be earning interest at 2,5% in a bank a/c. We've done the figures (repeatedly) & know that we can live quite comfortably on under $35k pa, so when I start receiving the pension, we'll have used around $70k of our savings & will have around $280k remaining. After my pension starts, we'll only need to use around $15k-$20kpa of our own funds to maintain our current lifestyle. In 7 yrs, my husband will get the pension too & by this stage, we'll still have a nice little nest egg of around $140k+.....this does not include the interest our money will have earned over the years, which will be a considerable bonus to our funds. We expect our money to help us along until we're well into our 80's, but in the meantime, we're going to enjoy our life as a retired couple, before we're too old.

S Kris
October 2, 2021 2.14pm

What about inflation. Our $35K a year is today. In 5 years time we will need maybe $70K to have the same standard of living, and one thing we can be sure about is that with more elderly and less people paying income tax the retirement pension is not going to increase by 100% to cover such increases in our cost of living!

Brett Watkins
October 6, 2021 1.17pm

That's some serious inflation if $35k -> $70k equivalent in 5 years time... it's highly unlikely to be that radical

July 26, 2018 12.55pm

Thanks for sharing, Judi. Sounds like you're on track for a great retirement!

John O
March 24, 2021 2.39pm

Not so fast Money, your crystal ball failed.

October 19, 2018 12.11am

Why did no one reply to "h" 22 July 17. What if you do not own your own home.? Either single or married. How much do you need then?

February 9, 2019 11.39am

The thing to remember with the sweet spot example is that the pension doesn't start till 65(now changed to 67yrs) and what if its changed again to 70!

If you are able too, keep saving and planning your own retirement don't rely on the govt. but if you do get to 1 mill by 50-55 just retire then, spend 50k a year enjoy more yrs of retirement and now your at the sweet spot.

Forget the cruise and kitchen upgrade use the savings for a much earlier retirement. FIRE.

February 22, 2019 7.29pm

You sound like you work for the government judi b. Also perhaps you might not have children u wanted to leave anyhing to either.
Somehow u have got through life so far and to your credit you've managed to be so positive and stay positive. I wish I could think more like that.
My first thought was:
What happens if you or your husband have a stroke or something and have to end up in an aged care facility or needing some expensive care? What happens if something really emotionally and financially detrimental happens?
I hope you have a plan B because if you think the government will look after you or centrelink will be helpful in the event of the worst happening you will be in for an awful shock I'm afraid.
I hope for your sake that everything pans out as well as you have calculated.

February 22, 2019 9.56pm

What a load of crap all of this is. The only retirement sweetspot is when you become an a**hole politian for however many years you need to in order to retire on a fully funded government pension for the rest of your life.
I really wish money mag would get out into society and amongst actual aged pensioners and sit with a whole heap of people over a period of time and watch how hard life actually is for most of them, especially before writing and publishing a half baked emotionless article with a partially positive overtone for selective people, and causing worry for others.

I'd really like to read something decent where the writers have actually got out there to experience real life so that they could report back with something real and actually have some decent advice for a change. Go and find the wives or husbands who have lost their other halves and are living in dilapitated houses that need repair but unfortunately don't have enough savings
to do so. Find and talk to the generation who don't have any super because it wasnt mandatory and they were the generation that started their own businesses and backed themselves hoping to make enough money to be able to live, pay off their mortgages and then save and self fund their own retirement. Or speak with the ones that had all their super taken away in fees before the govt introduced the $250k guarantee. Perhaps you might even come across the poor old sick ones who battled their whole lives to support their growing families but who might be tied into partnerships with 1 or 2 brothers or sisters over land- where they are not able to come to agreements with one another to sell up, or if they do, perhaps money mag could then sit there observing how quickly centrelink swoop in to cancel their pensions because finally they were able to top up their dwindling savings accounts which started off at a 5% interest earning account and they now are lucky to find a bank to offer them 1% plus a bonus .7% if they set up an online savings maximiser for 6mths (even though they don't know what "online" means and don't know how to do anything with a mobile phone but call their sons number that they have memorized by heart because they don't understand how to navigate a phone menu, nor do they understand why centrelink continue to deem them as earning over 3% interest).
Sit there and observe the stress and turmoil and helplessness some of the poor aged pensioners endure when their health care card is ripped up because of trivial details that some idiot centrelink employee misunderstood or chose to enter into their system in a way that purposely penalises a pensioner (Or had no choice but to process a certain way due to the way their computer program has been knowingly and purposely pogrammed to operate) and watch as they -spend the next 6 months burning through what is supposed to be within their allowable cash assets limit, but which theyre now having to pay in excess of $200 a month for all their ongoing medicines they are prescribed in order to manage heart problems, blood pressure, chronic pain, cholesterol, reflux etc etc.

Perhaps after observing all the real life crap that a lot of pensioners actually go through- someone might be able to write an article with some decent frigging advice or instructions to follow that will help us get ahead or even just into a comfortable financial place? This article is puss, and unfortunately it appears that nearly everything else I've been reading on this site while I desperately search for clues or advice to assist my own aging parents with knowledge- has turned out to be complete nonsense reading as well. Why bother even writing this?

October 2, 2021 7.46pm

Well said Liz

February 24, 2019 8.49pm

Hi Liz, you sound really upset by this. Are you looking for some specific advice for your parents circumstances?

Centrelink is a maze to navigate, but if you book an appointment in advance, and have all the relevant details and a full financial picture to hand they can be really helpful in applying for the right benefits.

Do your parents own their own home? If they do, there are many options available to them, even if they don't have other assets.

March 8, 2019 8.56am

Still waiting to see reply to "Steve" and "h" - what if you don't own your own home - single or partnered???

April 13, 2019 11.51am

A single who doesn't own their own home can have up to $465,000 in total assets & still receive the full pension . (As of 2019)
Non home owning couples can have up to $594,500.

In answer to Liz's question regarding Judi's plan B,
Liz is correct, Centrelink will not help you until you are virtually penny less.
The system is designed as a safety net only.
The best you can do is try to stay fit/healthy & take out some insurance which is expensive as we age.
But fair play to Judi... why not enjoy life why you can & retire early although from what I can see some what frugally too.
My plan ( I'm 56 now) is to continue working & pump my super up.
I may not end up any better off than being in the so called "sweet spot" but at least I will have choices.
Plus working gives me a purpose/ keeps me fit & keeps me socially engaged which is great (as long as you mostly enjoy your job).
But I will make sure that I enjoy every day along the way and have lots of nice holidays as non of us know what the future holds do we.

May 1, 2019 9.06pm

Spot on Gman im thinking the same way as you ,,Bang on cheers

June 20, 2019 11.48pm

I'm in my thirty's how can I get my money out before this thing crashes? I'm not going to get a pension nor do I want one. I want to be financially free and not have to worry about the government telling me what I can and can't do with my money.

June 22, 2019 11.01pm

Yes exactly my thinking too. Save as much as you can and then use that to retire early. Who the hell actually wants to retire at 67? If you wanted to you could retire early then run down your savings until you hit the sweet spot at 67 and qualify for the full aged pension. Personally I do not want to have to rely on the govt at all as I don't trust Centrelink.

July 11, 2019 2.03pm

I am no accountant, but I imagine the rules are exactly the same. You are likely paying rent and are subject to rental increases. If you do not have many millions, your retirement will not be as comfortable as for your homeowning peers. One option is to purchase a home If you have enough to purchase a property in the area you are happy to live. You need to assess your options carefully.

July 28, 2019 8.38pm

This seems like a great idea, but I would be worried that the age pension might be abolished or inaccessible by the time I reach pension age, due to the increased demand (baby boomers, population growth) and the money pot drying up.

August 5, 2019 9.37am

Hi everyone there is no doubt it's tuff out there. I am 60 almost 61 and am flating with my 25yr old son... Thank goodness for him. Next year 2020 he will move away for work and I can't afford to pay the rent on my own. I worry everyday about my future and it is not where I planned to be at this stage of my life.. When we are making comments about people who end up on the pension please just take a moment to consider how they ended up there. Having looked at a number of sites over time seeking some positive advise I have noticed there seems to be an assumption that because you have ended up in this position that you are and always have been a looser.. Well not the case we all have a story.. Won't bore you with too many details. We worked hard built up a property portfolio had a mortgage free home and quite a lot of money in my husbands super... What happened? lots of stuff but to finish us off we went into the building business it took everything we had left. During this time I was working in childcare to keep food on the table. We my husband, son our cat and I went to hell. We all suffered mentally from the stress.. Today I flat with my son my husband lives elsewhere and cares for his sister.. He is doing ok his sister owns her property and they have no debt we all get on ok.. I thought we were good to go when we were in our 40s believe me life is full of twists and turns. For now I am just glad not to be in debt and grateful for friends and family. I would really like to enjoy the time I have left on this earth and would rather not have to be so worried about money..

Did you know in New Zealand you get the pension no matter your circumstances it is not means tested which is the way it should be. Once you are retirement age even if your partner is working you get the pension. What might that do for the economy..people having money to spend or donate help struggling family members out the possibilities are endless..Maybe e
less time spent in hospitals and at doctors as people WOW might be happy, less stress = better health and happier people less pressure on the medical system. All those savings could go to funding a happier retirement, just a thought. We really do need to rethink what we are doing and stop making assumptions about each other. After a lifetime of working and trying so hard to be financially independent this is part of my story.

August 7, 2019 10.06am

Very interesting.... My question is I am in a defacto relationship and I have a good superannuation but my ptnr does not.
I have savings but was wondering if it is best kept as an investment account as I was considering adding it to my Superannuation. However, this would be an after tax contribution. I am turning 60 and hoping to retire at 65 but it appears very difficult as I own my own home with a mortgage so retirement on $54k per annum for a couple appears rather dismal. :(

Money magazine
August 7, 2019 12.43pm

Hi Elle,

While we can't give you advice here, if you would like advice on your situation please email [email protected] to appear in Ask Paul or Ask the Experts.

- Money team

Jill Walker
November 10, 2019 2.35pm


I am in a similar situation. Can you link me to the reply/outcome from Ask Paul or Ask the Experts, please.

Thank you

Money magazine
November 11, 2019 9.51am

Hi Jill,

Unfortunately Elle has not submitted her case study to Ask Paul or Ask the Experts. Feel free to send in your own question if you would like advice on your own financial situation.

- Money team

Ash Chetty
November 13, 2019 4.16pm

Not sure if that 'sweet spot' of $400k is correct. The income from account based pension of $20k will be subject to 'Income test'. I believe the current threshold is $7,800 p.a. So anything above that amount will reduce your pension amount which means $52,727 annual income is not correct. Let me know if I am correct here.

Glenda Bradley
July 23, 2020 6.54pm

The $20,000 drawdown is not income. It is your own money. The only income is deemed interest earned on $400,000.

Ash Chetty
July 26, 2020 10.33am

Thanks Glenda!

Steve Hawker
December 3, 2019 8.09pm

Interesting posts that I can both sympathise with and grumble the same. (As I do).

When I first went to work 45+ years ago my taxes contributed to my/others pensions for retirement and it appears that I worked too hard and my contributions for my retirement have been taxed and taxed again to the point that I will never receive a pension because I simply worked hard and made a few bob, discriminatory perhaps, thank god I don't need to live on a measly pension but for those that do it is hard yards for 20 odd K a year.

Bitter maybe for my "lost" contributions within a system that changed a hundred fold, happy I built my own future and still paying taxes for those less fortunate.

Cheers, Steve.

Matt Wilksch
December 5, 2019 7.36am

I think I'm missing something here..

If the $275,000 'sweet spot' pays an annual $13,750, then isn't the pension affected?

This amount equates to $528 a fortnight, which is $354 in excess of the $174 a fortnight threshold. Wouldn't this seriously reduce the pension amount? Or are the rules different if the money is kept in a super fund?

Matt Wilksch
December 5, 2019 9.16am

Sorry Steve, I should have made that a new post, not a reply to yours.

Sally May
September 18, 2020 6.11pm

This is so unrealistic. I live on $15K per year (yes, I live frugally) and I don't see how I will, magically, be spending twice as much in retirement as I do now. So going by your estimate, I actually need to save zero dollars as the pension will be a lot more than I spend now.

Di Cole
January 4, 2021 3.34pm

To be fair, Sally May, it is not unrealistic. Yes you will be paid more on an aged pension and yes you are clearly not in any position to save any dollars now. No one is asking you to spend more.

Chris Deliyiannis
January 22, 2021 11.16pm

I find this a bit confusing. Projections show the pension will eventually kick in it may just be later depending on your Super balance and the income you draw and the age you retire. You can maintain a desired level of income initially from just your Super then from your Super AND the pension. Would you say this is correct?

Anne Bowden
April 27, 2021 10.12pm

But surely those on a million plus in super can take out $65000 annually if they want to and when they hit a certain amount remaining they can go on the pension. What's the big deal? Use your super as you wish then put your hand out. Pure scare mongerinf.

Frank Smith
April 28, 2021 6.50am

Why would anyone deliberately blow through $65,000 a year just so they can scrape by on $17,000 a year on the pension?

Gloria Alkins
March 29, 2022 1.35am


Fiona Stocks
July 9, 2021 6.55pm

I'm totally confused We work hard all our days pay our taxes put money into our super then we get penalised by doing the right thing making sacrifices then they say oh you have too much now so they take the pension off us other countries overseas doesn't matter how much super you have or how much you have in assets your still get your full pension as rightly so you have worked for it

What happened to the land of milk & honey Politicians keeping changing the rules

Lea Quinlan
May 1, 2022 4.21pm

Can this be updated Money for how it will work in 2022

Money magazine
May 3, 2022 10.06am

Hi Lea,

Thanks for your question.

Good news - Susan Hely is already in the process of researching a follow-up to this story for 2022. That article will appear in the July issue of Money magazine.

In the meantime, we also wrote about this last year. You can read those articles here:



- Money team

Further Reading