Written

For

The

Australian

-

How

much

super

you

need

to

hit

the

retirement

income

sweet

spot

–

and

how

you

can

achieve

it

What does a "comfortable" retirement actually cost? Ask ten advisers and you'll get ten answers — but I'm going to give you mine.

The reality is that "comfortable" is subjective. A CEO earning $1m a year won't feel flush retiring on $100,000, but someone who's spent their career on minimum wage would think they'd won the lottery. So the headline figures from the industry bodies need some context.

ASFA says a homeowner couple needs $730,000 to spend $77,375 a year comfortably. Super Consumers Australia pushes that to $1.2m for $89,000 a year. Both assume you'll gradually run your super down to zero by your mid-80s. I think that's a flawed assumption. We're living longer, aged care is expensive, and nobody wants to be sweating their bank balance at 85.

My view? If you own your home outright and can generate $70,000 to $100,000 per year tax-free — roughly $1,500 a week — you'll have a genuinely enjoyable retirement. To sustain that without drawing your balance down to nothing, you're looking at $1m to $1.4m in super, assuming a 7% net return.

Here's the part most people miss: the "retirement sweet spot." A single homeowner with under $321,500 in assets outside the home (or $458,500 for couples) still gets the full age pension on top of their own super income. Two income streams. That's why a modest retirement can be achieved with just $120,000 in savings.

The system isn't perfect. Renters — one in five retirees — are genuinely disadvantaged, because the higher asset test thresholds don't cover today's capital city rents. And confidence in super keeps getting knocked around by both sides of politics. Division 296 is a recent example: taxing unrealised gains was a shocking idea, thankfully scrapped, but the aftertaste lingers.

Own your home. Build your super. Aim for the sweet spot.