How much passive income can I earn off my $800,000 superannuation balance?

Let's take a look.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When it comes to superannuation, it pays to start planning as early as possible, so you know exactly what you're in for as you approach retirement.

Figures released by the Association of Superannuation Funds of Australia show that on average, people do not have enough in their superannuation for what they deem to be a comfortable retirement.

If you're keen to figure out how much you can expect to have in your superannuation when you retire, be that at age 60 or later, there are plenty of calculators around; however, I'd suggest the Federal Government's MoneySmart website as the one to use.

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.

Image source: Getty Images

How much income can I generate from my superannuation?

Looking at a lump sum of $800,000, the good news is that it's well above the $630,000 ASFA says you need for a comfortable retirement as a single person.

Keep in mind that ASFA assumes you own your own home and draw a part of the Age Pension.

So how much could you expect to earn from your $800,000 in investments?

If you are simply drawing dividends and not drawing down any of the capital, the sums are quite simple.

If you can earn a 10% yield – which would be ambitious – you would earn $80,000, while if you were earning a 5% yield, the amount would be $40,000.

I'd suggest a yield somewhere between these two is achievable, so let's assume a 7.5% return, which would return $60,000.

What makes this even more realistic is that once you are retired, your tax rate on your superannuation drops to zero, and you get the full benefit of franking credits.

This means that if a share pays a 5% yield, the retiree receives a yield of 7.14% once franking credits are added back in.

Franking credits compensate shareholders for tax already paid by the company.

Which shares generate good income streams?

So, what are some shares that might be worth owning if you're aiming for these sorts of returns?

A consistent high dividend payer is Universal Store Ltd (ASX: UNI), which is currently paying right on 5%, while Regal Partners Ltd (ASX: RPL) just declared an improved first-half dividend and is paying an annualised rate of 9.7%.

The Betashares Australian Dividend Harvester ETF (ASX: HVST) is paying 5.54%, while another dividend-focused fund, WAM Income Maximiser Ltd (ASX: WMX), is paying 4.29%.

Among the blue-chip shares, BHP Group Ltd (ASX: BHP) is paying 3.72%, while Telstra Ltd (ASX: TLS) is paying 4.43%, and Woodside Energy Group Ltd (ASX: WDS) is paying 4.89%.

So as you can see, there are plenty of companies paying healthy dividends, which can help you attain your income aspirations.

Motley Fool contributor Cameron England 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 positions in and has recommended Telstra Group. The Motley Fool Australia has recommended BHP Group and Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Superannuation

Mid-aged couple with surprised expressions on their face as they look at a laptop.
Superannuation

Are you one of 7.5 million Aussies with an average $41,000 in lost superannuation?

Here's how to find out.

Read more »

Couple holding a piggy bank, symbolising superannuation.
Superannuation

Here's the average Australian superannuation balance at 50 and 55

Are you on target for a comfortable retirement? Here are the numbers.

Read more »

Woman using her laptop with her feet up.
Superannuation

Want $50,000 a year in retirement? Here's how much superannuation you may need

Retirement isn't about one number. It's about making your money last.

Read more »

Man looking upwards contemplating which shares to buy
Superannuation

How much should I have in my superannuation by age 53?

How does it compare to what you have saved?

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Superannuation

How much superannuation do I need to earn $80,000 per year in passive income?

What targets do you need to achieve this goal?

Read more »

Person holding alarm clock with work and retire written.
Superannuation

How much do I need to invest in ASX shares to retire with an extra $1 million on top of my superannuation?

Wouldn’t it be nice to retire with an extra $1 million on top of your super balance? Here's how I'd…

Read more »

Numerous Australian dollar notes laid out.
Superannuation

The average superannuation balance for 35-year-olds in Australia in FY26. How does yours compare?

Getting an early start with superannuation savings is a great idea.

Read more »

Elderly couple using laptop at home while drinking a cup of coffee.
Superannuation

Payday superannuation is two months old. Has it made you better off?

A real gain, just a very small one.

Read more »