The cost of living has skyrocketed over the past few years. In 2025, many superannuation balances may have also taken a hit, driven by tariff-related volatility. For those invested in US equities, the impact is likely to have been more dramatic.

Australians planning for retirement may be wondering how much money they will need.

What's the magic number?

$1 million is often the figure put forward as the ideal amount to retire on. According to the latest ABS survey, the average retirement age in the 2022-2023 financial year was 64.8 years. 

However, the super balance of the average Australian approaching that age is significantly below $1 million. According to the Australian Tax Office, Australians aged between 60 and 64 have a median super balance of $211,996 for men. For women, it's around $50,000 lower at $158,806.

So, how much is really needed for a comfortable retirement?

What does AustralianSuper say?

AustralianSuper, Australia's largest superannuation fund, which manages retirement accounts for more than 3 million Australians, recently weighed in. The super fund discussed how much is really required to comfortably retire, and which factors may influence this figure.

Firstly, it was noted that the Government Age Pension acts as a safety net to supplement additional income. However, retirees are unlikely to be able to do too many discretionary activities in their golden years relying on this income stream. 

Second, AustralianSuper pointed out that 'modest' and 'comfortable' will mean different things to different people. This makes it difficult to standardise a target goal for all Australians. However, AFSA Requirement Standard provides an estimate on how much is likely to be needed to achieve a modest or comfortable retirement. 

Assuming the retirees own their own homes, $51,085 per year is estimated to be required for a comfortable retirement for a single person and $73,077 for a couple. For a more modest retirement, that number drops to $32,897 for a single person and $47,470 for a couple.

AustralianSuper advises prospective retirees to construct a budget to plan appropriately. The budget should cover expenditures on groceries, holidays, and housework assistance. Unexpected costs such as healthcare-related expenses should also be factored in.

Another detail to consider is the likely retirement duration. Australians are living longer, with 65-year-old women expected to live to 87.8 and 65-year-old men expected to reach 85.2.

Can I retire?

A single person with a $1 million portfolio that grows 10% annually would have more than enough for a comfortable retirement. That would allow around 5% to be withdrawn for living expenses (meeting the $51,085 recommendation). The remaining 5% would ensure the portfolio value kept up with inflation. Australia's long-term inflation rate has averaged around 2.4% annually, with the Reserve Bank of Australia's target range between 2% and 3%.

For those aiming for the $1 million portfolio, The Motley Fool's Tristan Harrison recently shared 4 simple steps to becoming a millionaire with ASX shares. It's never too early to set yourself up for retirement!

However, a comfortable retirement could be achieved on a lower balance. For example, a single person with a $500,000 portfolio that grew 10% annually could withdraw that 10% for living expenses. While the portfolio would not keep up with inflation, it would easily sustain 20 years of retirement. That is, unless any significant and unexpected expenses arose.