Australia · Worked example
What Retirement Income Could A$500,000 in Super Provide?
In this example, A$500,000 at age 67 funds about A$25,871 a year, or A$2,156 a month, to age 95. This is a smooth-return illustration before personal income tax, with no Age Pension included.
Assumptions you can reproduce
Start retirement now at age 67 with A$500,000 in super and plan to age 95. Salary and additional contributions are zero because there is no accumulation period. The illustrative annual return is 6% after investment earnings tax but before a 0.5% percentage fee and A$100 annual fixed fees. Inflation is 2.5%. Age Pension is A$0 unless a scenario explicitly changes it.
All retirement amounts are in today's Australian dollars and before personal income tax. The model keeps the entered earnings-tax-adjusted return throughout retirement. It does not switch automatically to a tax-exempt pension account or apply mandatory minimum drawdowns. The separate target-income projection starts at A$45,000 a year; it is not the level budget calculated below.
How much depends on the return assumption?
| Entered return | Annual budget | Monthly budget |
|---|---|---|
| 3% | A$17,720 | A$1,477 |
| 6% | A$25,871 | A$2,156 |
| 8% | A$32,167 | A$2,681 |
These are three assumptions, not conservative, likely and optimistic probabilities. A higher constant return makes more spending appear affordable. It does not establish that an investment can deliver that return or sustain withdrawals during market falls.
What happens during the first twelve months?
The base example receives A$0 from entered pensions and draws about A$25,871 from super. With the assumed returns and fees, the balance after twelve months is about A$488,174. The calculator's monthly table shows this timing and can be exported or printed.
The budget is found using the full 28-year horizon, rather than dividing the balance by twelve. It uses capital as well as returns. It does not promise to preserve A$500,000 for an estate.
What if I retire at 65 instead of 67?
Hold the super balance at A$500,000 at each retirement date and keep Age Pension at zero. Starting at 65 adds two years of withdrawals compared with 67; planning still ends at 95. Set current age and retirement age to the same value to reproduce each row.
| Scenario | Start → end age | First-year annual budget | First-year monthly budget | Try the figures |
|---|---|---|---|---|
| Retire now at 65 | 65 → 95 | A$24,745 | A$2,062 | Try: Retire now at 65 |
| Retire now at 67 · base case | 67 → 95 | A$25,871 | A$2,156 | Try: Retire now at 67 · base case |
| Retire now at 69 | 69 → 95 | A$27,180 | A$2,265 | Try: Retire now at 69 |
This measures the retirement-length effect only. A real decision to work for two more years may change contributions, investment growth and accessible assets. Those changes are excluded from this equal-balance comparison.
What if annual percentage fees rise from 0.5% to 1%?
Keep the 6% entered return and A$100 annual fixed fee unchanged. An extra 0.5 percentage points equals A$2,500 on the opening A$500,000 if that balance stayed constant. Actual modelled percentage fees change with the account balance.
| Scenario | Start → end age | First-year annual budget | First-year monthly budget | Try the figures |
|---|---|---|---|---|
| 0.5% + A$100 a year | 67 → 95 | A$25,871 | A$2,156 | Try: 0.5% + A$100 a year |
| 1% + A$100 a year | 67 → 95 | A$24,304 | A$2,025 | Try: 1% + A$100 a year |
| 1.5% + A$100 a year | 67 → 95 | A$22,786 | A$1,899 | Try: 1.5% + A$100 a year |
The comparison keeps investment performance the same to isolate costs; it does not rank products with different investments, insurance or services. Check whether your return estimate is already net of any charges before entering fees.
For the next comparison, see planning to 100 with lower returns and higher fees.
Separate a spending model from a pension product
Moneysmart describes several ways to receive retirement income, including account-based pensions, lump sums and lifetime income streams. This calculator does not choose between them. Product terms, access conditions, tax and minimum withdrawals need their own check.
If an account requires a larger minimum withdrawal than the modelled spending budget, the withdrawal and the amount you consume may differ. This model does not track reinvesting the surplus outside super or the tax on those outside investments.
What this example cannot tell you
Returns arrive smoothly every month in this model. Real markets can fall early in retirement, and the order of returns matters when money is being withdrawn. The calculation does not estimate a probability of success. A budget that exhausts capital near the chosen end age leaves no modelled reserve for living longer, large repairs, care costs or an inheritance.
Try a lower return, higher costs and a longer horizon. Check pension access with your provider and compare essential expenses with reliable income. These are invented educational scenarios, not recommended spending levels or personal financial advice.
This link loads only the invented example above. Your own entries are never added to the link. Figures in the article are rounded to whole currency units; the model calculates with unrounded values.
Sources and review record
The official pages below were checked on for the specific statements described. The numerical scenarios are our calculations, not government forecasts. No independent financial or native-language reviewer has approved this material.
- ASIC Moneysmart: types of retirement income — distinguishes super, government benefits and other retirement income.
- ASIC Moneysmart: choosing a super fund — compare percentage and fixed costs alongside investment performance, insurance and services.
- Services Australia: Age Pension — check current eligibility and payment information separately.
Full methodology · Twelve-month budget method · Update log · Independent review brief · Report a correction