In Australia, superannuation is a popular tool to build wealth for retirement.
It's tax effective too, and you can also use your superannuation to build a passive income to live off in your retirement years.
But by investing your superannuation wisely, you will benefit from lower tax rates, compound growth, and then eventually a retirement lifestyle boosted by a tax-free passive income.
The question is, how much do you actually need in your superannuation to receive the passive income you want?
Let's break it down, using $10,000 per month as an example.

Image source: Getty Images
How much superannuation do I need to earn $10,000 of monthly passive income?
First, you need to work out what $10,000 in passive income every month totals over the year.
So, $10,000 x 12 = $120,000.
Then you need to divide your annual passive income by the dividend yield of your overall portfolio.
For example, $120,000 ÷ 2% = $6 million (that's the portfolio size you'd need).
The only catch is that the answer varies depending on your dividend yield.
That means a super portfolio with a dividend yield of around 4% only needs to be half the size of one with a dividend yield of around 2% to generate the same level of passive income.
Which is good news because a $6 million superannuation balance is out of reach for the majority of Australians.
Ok, so how much do I need to earn $10,000 off a 4%, 5% or 6% yielding portfolio?
We already know what portfolio size you'd need to earn $12,000 per year (the equivalent of $10,000 per month) off a 2% yielding account.
But if your overall portfolio has a slightly higher dividend yield of around 4%, you'll need a balance of around $3 million to earn the same $120,000 per year in passive income.
If the yield of your portfolio is higher still, at around 5% for example, your balance would need to be closer to $2.4 million to earn the same dividend income.
For a 6% yielding portfolio, you'd need a superannuation balance closer to $2 million to earn the same amount again.
And so on…
You'd still earn $120,000 per year in passive income from each of these superannuation balance sizes.
I'm aiming for a 5% yielding superannuation portfolio, which ASX shares can I invest in?
To earn a $120,000 passive income off a 5% yielding portfolio, you'd need around $2.4 million saved.
But note, if you want a portfolio yielding around 5%, it doesn't mean that every investment in your portfolio has to yield that level. It can be a combination that yields 5% overall.
These are my top picks.
Defensive shares like Telstra Group Ltd (ASX: TLS), Sonic Healthcare Ltd (ASX: SHL), Origin Energy Ltd (ASX: ORG) or Amcor PLC (ASX: AMC) are a solid choice for income-seeking investors. These all yield around the 5% to 6% level, at the time of writing.
Non-discretionary ASX consumer staples stocks are also naturally defensive, but many of them yield slightly less. Supermarket giants like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) can generate stable cash flow across all phases of the economic cycle. This translates to consistent dividends for shareholders. These shares pay around 3%, at the time of writing.
Then there are your popular ASX mining shares. These are more cyclical, but such stocks usually rebound strongly during recovery. BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG) and Rio Tinto Ltd (ASX: RIO) are popular options. These yield anywhere between 3.5% and 6.5% at the time of writing.