Retiring without $1 million? Don’t worry, so is everyone else

For years people planning for retirement have been haunted by a single goal: reaching $1 million in super before they retire. Apparently, that’s what we’re all supposed to have neatly tucked away before we even think about retiring. A million bucks. In one account. By 65.

No pressure, right?

For a long time, retirees have though of $1 million as the ideal amount to have in retirement. But new research has just blown a hole in that myth.Credit: Sam Bennett

But new research from AustralianSuper has just blown a hole in that myth – and it’s about bloody time.

It shows 94 per cent of recent retirees didn’t retire with $1 million in super. Most didn’t even come close. And yet ... they retired and many of them are living in comfort. Without fanfare. Without financial collapse. Without eating two-minute noodles in a cardigan for the next 30 years.

Take Warren Morrison – he retired at 64 with $350,000 in super, and a plan. He’d figured out how much he’d need to spend to have a good life. Now he officiates weddings, runs trivia nights, and judges roller-skating competitions (as you do). His secret? Not being rich. Just being smart about the life he actually wanted.

So maybe the real question isn’t “how much do I need?” or “can I get to a million dollars in super before I retire?” Maybe it’s “what kind of life do I want?”

Planning for retirement isn’t about chasing a number – it’s about making your life and your money work together, on your terms.

Most people retire with a blend of superannuation, the age pension, savings, maybe some part-time income from working. And as they do so, without a million dollars in super, they work out how to make things work. Along the way, most people realise: it’s not about a magic number. It’s about building a life that fits you.

This research doesn’t say super doesn’t matter – it does. It just reminds us that super is a tool, not the goal. And if the idea of hitting $1 million has been keeping you up at night, maybe it’s time to dream a different dream. So where do you start?

As Ross Ackland, AustralianSuper’s Head of Advice and Guidance, puts it: “A $1 million superannuation balance is often thrown around as a benchmark, but it’s an arbitrary figure. The reality is, what you need in retirement depends far more on your lifestyle expectations, your spending habits and your access to other income sources.

“The smarter approach is to reverse-engineer it. Start by understanding your current cost of living, then estimate what might change in retirement – things like commuting costs might drop off, but healthcare might increase. Once you know your target annual income, you can build a strategy to generate that.”

Exactly. That’s the smarter approach - reverse-engineer your retirement. But how do you actually do that?

Start by getting curious. Think about what you want your life to look like. Understand your needs and your hopes and dreams. Then, start putting the pieces together. Consider these questions:

What does a good life actually cost you now? Pause and build a budget based on how you live today, before retirement.

When you understand what you already spend to live well, you get a clearer picture of what you might need in retirement. Don’t just lean on benchmarks for how much people spend in retirement, get a grip on your own reality. That builds confidence.

What’s likely to change when you stop working? You’ll probably spend less on commuting, takeaway lunches or work clothes, but possibly more on travel, hobbies or health costs.

Think in terms of trade-offs, not cutbacks. Unless you have to, don’t shrink your budget just to hit an arbitrary target. Design a life you want to live – and can afford to.

What income will you have when you retire? Think of your retirement income in layers - different streams that kick in at different stages, depending on your age and choices:

• Personal savings which is accessible before you reach retirement or pension age
• A transition to retirement income stream which can be accessed from 60, while you’re still working if you don’t meet the condition of release.
• Superannuation income or lump sum drawdowns, from 60 when you reach the condition of release, or 65 if you keep working.
• The age pension which only becomes accessible from 67 onwards; and
• Part-time or casual work which can be a part of your life in retirement. If you choose to keep working, there’s no restriction on how long you might want to.

Explore how much you can safely draw from your super each year. Use a retirement income calculator to see how your income layers can work together. The MoneySmart Retirement Planner is a great (and free) place to start. Most super funds also offer smart tools tailored to their members.

Once you’ve got a sense of how much income you’ll need, you can start building a strategy to hit that goal before you retire. I’m pretty sure for most people, it won’t be $1 million.

And remember, planning for retirement isn’t about chasing a number – it’s about making your life and your money work together, on your terms. If you don’t have enough yet, make a plan for how you’ll close the gap. That’s where the real power lies.

So no – retirement isn’t about hitting some magic million-dollar number. It’s about knowing how much is enough for you, and being confident in your numbers, then getting on with living your life.

Bec Wilson is the author of the bestseller How to Have an Epic Retirement and the newly released Prime Time: 27 Lessons for the New Midlife. She writes a weekly newsletter at epicretirement.net and hosts the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.