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 much less.

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

It’s easy to put off thinking about retirement when retirement is still years away. In this five-part series, we ask top experts to explain how you can organize your super in a few simple steps, avoid greenwashing and set goals for your retirement.

What the two most important benchmarks say

Two major organizations publish pension benchmarks in Australia and paint a very different picture.

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

Modest pension: Covers the basics: a cheap car, basic private health insurance, one domestic holiday per year. This costs around $35,503 per year for a single homeowner, and the Old Age Pension (the regular government payment available to eligible pensioners aged 67 and over) covers most of this. You only need about $110,000 in super.

Comfortable retirement: Including top level private health insurance, a newer car, eating out regularly and traveling abroad. ASFA estimates this to be around $54,240 per year for one homeowner, requiring around $630,000 in super costs. For couples it is about $77,375 per year, which requires about $730,000.

These are significant amounts, but well under $1 million.

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

Rather than imagining a lifestyle, the consumer group uses factual data from the Australian Bureau of Statistics on what retirees actually spend. The key finding is that a typical single retiree at the middle level of the three options will only need $322,000 in super costs.

Don’t forget that retirees have no work-related expenses and they also enjoy a range of discounts on things like municipal rates, electricity and medicines, which can really add up.

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

Why the numbers differ

The gap comes down to what each benchmark measures.

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

In any case, the old-age pension does a lot of the heavy lifting. At Super Consumers’ average spending level, around 67% of retirement income comes from the age pension, with the rest coming from your super balance.

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

While the pension is indexed to inflation, retirees’ main expenses – insurance, rates, utilities, health care and food – have risen faster than overall consumer prices.

This means that retirees who are highly dependent on their pension experience more financial pressure than inflation figures suggest.

There is a housing problem

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

That assumption is starting to become shaky. Research shows that the proportion of Australians aged 55 to 64 who still have mortgage debt has tripled since 1990, and the average debt for that age group is now more than $230,000. More than one in three millennials expect to retire while still having a mortgage.

The ASFA budgets are based on the assumption of full homeownership. This means that rent, mortgage repayments or major housing costs are not included.

If you rent or take out a mortgage until retirement, the required super balance can increase dramatically. ASFA estimates that renters need $340,000 to $385,000 for a modest lifestyle – more than a homeowner needs for a comfortable lifestyle.

Super Consumers Australia shows a similar difference, estimating that a renter will need around $659,000 in superannuation, compared to just $322,000 for a homeowner.

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

The gender gap in retirement

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

Australian women retire with around 25% less super than men. The gender pay gap (currently around 21%) grows into a much larger pension savings gap over the entire working life. Women also live longer on average, which means their money needs to expand further.

The government started paying for parental leave in July 2025 – a meaningful step forward. But the gap remains significant.

What this means for you

There is no one correct number. But before chasing a benchmark, ask yourself these questions:

• Will you become the full owner of your home?
• Do you want to travel or are you a homebody?
• Do you plan to generate one or two revenues?

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

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

The $1 million figure is not based on evidence for most Australians. But the lower benchmarks all have the same caveat: They assume you’re a homeowner. As more people retire with debt or as renters, even those more modest numbers may underestimate what you really need.

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