On the higher end, those organisations recommend individuals to save $545,000 to $745,000 in super by ages 65 to 67, for a comfortable or high-spending retirement. The only scenario where $1 million is set as the savings goal is for a high-spending couple in retirement.
A helpful cost of living benchmark prepared quarterly by the Association of Superannuation Funds of Australia (ASFA), shows an average single person needs approximately $595,000 in superannuation before retiring, while a couple requires around $690,000.
In fact, statistically, around 10% of retirees have $1 million or more in savings. The majority of retirees, however, have far less saved.
Yes, for some people, $2 million should be more than enough to retire. For others, $2 million may not even scratch the surface. The answer depends on your personal situation and there are lot of challenges you'll face. As of 2023, it seems the number of obstacles to a successful retirement continues to grow.
US News reports that individuals 65 years and older have average living expenses of about $50,000. At that rate, one million would last about 20 years. If you lead a more expensive lifestyle, one million wouldn't last as long, but scaling back your expenses would help it go further.
Plus, you might not be eligible for retirement benefits (like Social Security) until you reach certain ages. So, can you retire at 60 with $1 million, and what would that look like? It's certainly possible to retire comfortably in this scenario.
Can I retire at 55 with $1 million? Yes, you can retire at 55 with one million dollars. You will receive a guaranteed annual income of $56,250 immediately and for the rest of your life.
How Much Does a Couple Need to Retire Comfortably? A couple needs $690,000 to retire comfortably in Australia from age 67 until age 95. The amount that a couple needs to live comfortably in retirement is said to be $70,000 p.a.
The ASFA Retirement Standard Explainer says a comfortable retirement lifestyle would need $640,000 in super for a couple, or $545,000 for a single person.
This obviously depends on what annual income you want to fund but if you want to be able to afford a comfortable retirement—which is an income of just over $48,000 a year for a single according to the ASFA Retirement Standard—then you need a balance of at least $500,000.
That said, $1 million used to be the go-to retirement benchmark for financial security, says Michele Lee Fine, founder and CEO of Cornerstone Wealth Advisory. But the rising cost of living means it might no longer be enough, especially in expensive cities like New York, where Fine is based.
The Federal Reserve's most recent data reveals that the average American has $65,000 in retirement savings. By their retirement age, the average is estimated to be $255,200.
As Americans expect to live longer lives, the anticipated price tag of a comfortable retirement continues to climb. On average, Americans say they'll need at least $1.27 million to afford a comfortable retirement in which they can relax, spend time with family and travel.
The average retirement age in Australia is 55
And on average, Australians can expect to live to 85 for women and 81 for men (ABS, 2021). So depending on what age you retire, this means you could need your retirement savings to last up to 30 years.
The best time to retire for tax purposes in Australia is generally once you attain age 60, as it is at this stage that you will have tax-free access to your superannuation.
Assuming you retire at the age of 60 and make it to 85 (fingers crossed you'll celebrate the 100 too!) that's 25 years to cover financially. With $2 million in the pocket, it comes to about $80,000 per year or $6,667 per month to spend. And we're just talking about savings alone!
Of course, there are many caveats, including whether Social Security payments will be consistent. For now, though, $1.5 million should allow you to retire comfortably. Here are two things to consider when calculating your spending: Lifestyle.
Assume, for example, you will need 65 per cent of your pre-retirement income, so if you earn $50,000 now, you might need $32,500 in retirement.
How long will $800,000 last in retirement? Your money is projected to last approximately 30 years with monthly withdrawals totaling $2,024,574. How long will $1,500,000 last in retirement? Your money is projected to stretch beyond 30 years and you'll be able to make monthly withdrawals beyond $4,000,000.
Retiring On $2 Million
There are a lot of variables involved, but a $2 million nest egg should suffice for most couples if they keep an eye on spending and understand how their investments can affect the outcome.
With some planning, you can retire at 60 with $500k. Remember, however, that your lifestyle will significantly affect how long your savings will last. If you're content to live modestly and don't plan on significant life changes (like travel or starting a business), you can make your $500k last much longer.
Once a symbol of extravagant wealth, $1 million is now the retirement-savings goal for millions of Americans. For retirees able to accumulate $1 million in savings, the funds translate into inflation-adjusted income of $40,000 in the first year of a three-decade retirement using the 4% spending rule.
It's definitely possible, but there are several factors to consider—including cost of living, the taxes you'll owe on your withdrawals, and how you want to live in retirement—when thinking about how much money you'll need to retire in the future.
For example, the cost of living in your area, your lifestyle preferences, medical concerns, and additional retirement benefits all influence how much money you need to retire. For many people, $2 million in retirement savings is plenty. Some can achieve a peaceful retirement with as little as $600,000.