If you're ready to hang up your hat and enjoy your golden years with a $750,000 superannuation balance, how much passive income could you expect to earn each year?
The answer will, of course, depend on the yield you can earn from those super savings.
Now, in my opinion, investing in the right selection of ASX dividend shares is the best path to achieving a reliable passive income stream in retirement.
And what we'll look at below is the annual passive income that you can earn from your superannuation without drawing down that $750,000 balance.
We're also aiming for share price gains and higher annual dividends from those ASX shares over time to at least offset the eroding forces of inflation. This way your real passive income stream remains steady, or ideally increases, over the years as well.
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A few important points
While we'll look at three quality ASX dividend stocks that I believe are a suitable superannuation investment below, a properly diversified passive income portfolio will contain a lot more than just three. There's no magic number. But 15 or so is a decent ballpark figure.
Ideally these companies will operate in various sectors and locations. This will reduce the risk of your retirement income taking a big hit if any single sector or company runs into headwinds.
Also remember that the yields you generally see quoted are trailing yields Future yields may be higher or lower depending on a range of company specific and macroeconomic factors. Though, as mentioned above, we'll be aiming to invest in ASX shares that will increase their passive income payouts over the years.
With that said…
Tapping into superannuation for retirement income
Remember, the passive income you earn of your $750,000 superannuation balance will depend on the yield you're getting.
We'll take the average yield of the three ASX 200 dividend stocks below as our benchmark.
First up we have Bank of Queensland Ltd (ASX: BOQ).
Over the past 12 months, the ASX 200 bank stock has paid two fully franked dividends and a special dividend totalling 55 cents a share. At the recent Bank of Queensland share price of $6.63, the stock trades on a fully franked trailing yield of 8.3%.
Next, we have ASX 200 rail freight operator Aurizon Holdings Ltd (ASX: AZJ).
Over the past 12 months Aurizon has paid (or shortly will) two dividends totalling 23 cents a share, 90% franked. At the recent Aurizon share price of $3.72, the stock trades on a dividend yield of 6.2%.
And the third stock you might want to invest some of your superannuation into for passive income is Fortescue Ltd (ASX: FMG).
Over the past 12 months, the ASX 200 mining giant has paid (or shortly will) two fully franked dividends totalling $1.08 a share. At the recent Fortescue share price of $17.42, Fortescue shares trade on a fully franked trailing yield of 6.2%.
To the maths!
So, if you invest an equal amount of your superannuation into each of the above ASX 200 dividend stocks, you could expect to earn a yield 6.9%.
Meaning with a $750,000 investment, you could earn $51,750 a year in passive income without drawing down your super balance.
