How much superannuation do I need to retire on $100,000 a year?

Getting to $100k in retirement is no easy feat…

Most of us don't really start thinking about and planning for our retirement until we're of a certain age. Sure, we may dream of an early retirement and of a life spent in the hammock long before we get to 67. But it's only usually when that age starts to become uncomfortably close that we actually pay attention to what's happening in our superannuation funds.

Retirement is a topic that we discuss quite often here at the Motley Fool. We've gone into average superannuation balances at various ages before, as well as how much the typical Australian actually needs in retirement.

But today, let's discuss how much you'll need to have in super in order to fund a retirement with $100,000 a year.

Just to be clear, most experts don't think we actually need that much in retirement. The current framework from the Association of Superannuation Funds of Australia (ASFA) tells us that a couple only needs to secure an income of $72,663 per annum to live a 'comfortable' retirement and just $47,387 per year for a 'modest' one.

That projection makes some big assumptions, most pressingly that our potential retiree has paid off their mortgage.

But perhaps you want some additional financial security in your golden years. Or perhaps you have simply developed a taste for the finer things in life, and $72,663 isn't going to cut the cake. How much should you aim for?

Two people about to dive into a pool.

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How much superannuation do you need to retire on $100,000 a year?

Well, if you're currently at age 67 and you want to retire tomorrow, MoneySmart's retirement calculator tells us that a single Australian would need to have no less than $1.58 million in superannuation to make this happen.

This person would be able to use their superannuation to generate $100,267 per annum in annual income. Our lucky retirees would not need to draw on additional income for the Age Pension until they reached age 81, too. At that point, the Pension takes an increasing share of the annual income, until it is funding approximately $40,000 per year by age 90.

If you're in a couple, the burden is obviously far easier. This same calculator tells us that if they want a combined annual income of $100,000, both members of the couple will need just under $600,000 in superannuation funds at age 67.

This scenario would see support from the Age Pension kick in at around age 70 and again continue to ramp up each year from there.

Clearly, these scenarios might be out of some Australians' reach. That said, hopefully all readers can take some inspiration from the fact that it's estimated that we'd all be just fine on a more modest income.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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