Could you save $1 million in super?

Setting a long-term savings goal, such as how much super you want to have when you retire, can be tricky.

Retirement seems a long way off for many working Australians, super can be confusing, and there are many variables to take into account.

But not setting a goal can be trickier. About 29% of Australians believe they don’t need to think about their super until they’re close to retiring¹.

But almost two in five say not knowing how much they need to save for retirement – and therefore not saving enough – caused their finances to get off-track¹.

The amount of super you’ll need in retirement depends on factors including:

• your income and expenses.
• whether you own your home or have other assets.
• whether you are a member of a couple.
• the age at which you want to retire.
• the lifestyle you want in retirement. 
• any other income you might have in retirement, including the government Age Pension. 

To set a super savings goal that’s personal to you, head over to our Retirement Calculator, and it will take you through the process using the information you provide.   

Regardless of whether you’re ready to set a personal super goal – and many people aren’t – we’ve selected three potential super targets, and modelled how someone earning an average wage² might achieve them at retirement:

• $1 million – a catchy headline number in the ballpark of the amount many Australians believe they need to retire comfortably³. But is it achievable on an average salary?
• $100,000 – our most achievable target, it’s also the industry benchmark for homeowners who receive the government Age Pension to achieve a modest retirement, – albeit one with few luxuries⁴.
• $595,000 – the industry benchmark for a comfortable retirement, including private health insurance, a decent car, and occasional overseas travel⁴.

Many Australians who contribute extra payments to their super do so on an ad hoc or annual basis – such as at tax return time.

But if you can afford to, the easiest way to contribute to your super over time is to set up an automatic payment from your pre-tax pay using salary sacrifice.

As super is generally taxed at 15%, which is less than many people’s marginal tax rate, salary sacrifice may mean you reduce the amount of tax you pay while also boosting your super.

As it’s automatically deducted before you get your pay, it may be less noticeable, and making regular payments over time will allow your super to compound and grow faster.

The following calculations⁵ assume annual income of $100,000, average industry starting balances if applicable⁶, with super invested in a high growth option earning an annualised net return of 8%⁷ and monthly contributions made via salary sacrifice.

These examples are a guide only, so consider seeking financial advice to take into account your personal circumstances.

Janice wants to retire with $1 million. From age 25, she salary sacrifices $200 a month from her pre-tax pay into her super, in addition to the 12% compulsory super payments her employer makes.

At age 65, Janice would have $1,229,780 in her super -- more than twice the industry benchmark needed for a comfortable retirement⁴.

If she waits until age 35 to make additional salary sacrifice contributions, she will need to contribute closer to $450 a month to reach her million-dollar super goal.

At age 40, Raoul has decided to set some retirement goals and sort out his super.

He makes additional pre-tax payments via salary sacrifice to try to reach the $595,000 benchmark for a comfortable retirement recommended by the Association of Super Funds of Australia⁴.

After adding $50 a month via salary sacrifice to his super, Raoul could retire two years early with $627,524. By age 65, he could have $700,587.

If he waits until he turns 50, he’ll need to make extra contributions of $500 a month to reach his goal. 

Source: Moneysmart’s Superannuation calculator. Based on annual income of $100,000, with super earning 8% per annum and monthly contributions made via salary sacrifice. 15% tax is deducted from employer contributions. Starting super balance based on ASFA median balance, November 2023. Results are in today’s dollars and are net of fees and insurance. Actual returns may vary. Past performance is not a reliable indicator of future performance. 

Philippa lived overseas for many years and, at age 50, doesn’t have any super when she moves back to Australia with her spouse.

If she makes no additional contributions to her super, the compulsory 12% super contributions her employer makes into her account will add up to $206,351 by the time she turns 65 – exceeding the $100,000 mark.

From age 50, if she contributes an additional $450 a month via salary sacrifice, she could boost that total by a further $100,000 to $303,939.

If she waits until age 55, she’ll need to contribute close to $700 a month to achieve a similar outcome.

Note: As retirement approaches, many people switch some or all of their super to a more conservative option to reduce the risk of volatility. In this case, the balance at age 65 would be lower.

Source: Moneysmart’s Superannuation calculator. Based on annual income of $100,000, with super earning 8% per annum and monthly contributions made via salary sacrifice. 15% tax is deducted from employer contributions. Results are in today’s dollars and are net of fees and insurance.⁸ Starting balance at 55 based on annual income of $100,000, with super earning 8% per annum calculated using Moneysmart Superannuation calculator. Actual returns may vary. Past performance is not a reliable indicator of future performance.