By Philippa Billings, Chief Advice Officer, Otivo
The number most people have heard is $630,000. What almost nobody has heard is what sits inside it. ASFA's benchmark assumes two things that change its meaning entirely: that you spend the capital down to nothing over your retirement, and that you receive a part Age Pension the whole way through. It is not a figure you save and then live off the returns of. It is the amount of private savings needed to top up a government payment while the balance runs to zero at around age 85. Read it the other way and you will either badly over-target or badly under-plan. Here's what the number actually means, and the three inputs that produce yours.
For a comfortable retirement at 67, ASFA estimates a lump sum of $630,000 for a single person and $730,000 for a couple, as at March quarter 2026. Those figures assume you own your home outright, draw down all your capital over retirement, and receive a part Age Pension. A modest lifestyle is estimated at $110,000 single and $120,000 for a couple.
What do the ASFA numbers actually say?
The Association of Superannuation Funds of Australia publishes the Retirement Standard quarterly. It prices a detailed basket of retirement expenses and reports what each lifestyle costs a year, then separately estimates the super balance needed to fund it from age 67.
As at the March quarter 2026, for homeowners aged 65 to 84:
The lump sums for a modest lifestyle look implausibly small until you understand the methodology. A modest lifestyle is largely covered by the Age Pension, so the private savings required to reach it are correspondingly small. The same logic runs through the comfortable figures — they are top-up amounts, not total funding.
Note too that both sets assume home ownership. ASFA publishes separate, considerably higher figures for retirees who rent.
Why isn't $630,000 the same as "enough to live off"?
Because a drawdown plan and an income-from-returns plan are two different financial structures with very different price tags.
The rule of thumb people reach for goes like this: I want $60,000 a year, retirement might last 25 years, so I need $1.5 million. That arithmetic is not wrong so much as it is answering a different question — it assumes you fund every dollar yourself, with no Age Pension and no investment earnings along the way.
ASFA's method assumes the opposite on both counts. The balance stays invested and earns while you draw on it, and the Age Pension supplements the income throughout, increasing as the balance falls and the means tests become more favourable. That combination is why the number lands at $630,000 rather than well over a million.
Neither approach is more correct. They describe different retirements. The one worth knowing is which one you are planning for, because the target moves by hundreds of thousands of dollars depending on the answer.
What are the three inputs behind your number?
Every retirement target is built from three things. Call them the three inputs.
- What you will spend each year. Not what you earn now — what the life you want costs. ASFA's line-item budget is a useful reality check here, because the "comfortable" basket is more restrained than the word suggests.
- How long the money has to last. If you retire at 67 and live to your late eighties, that is roughly twenty years. Planning to average life expectancy leaves a real chance of outliving the plan, which is why longevity is treated as a risk rather than a fixed number.
- What else is coming in. The Age Pension for most people, plus any savings outside super, investment income, part-time work or a downsizer contribution. Super is usually the largest component, rarely the only one.
Change any one of those and the target moves. That is why a single national figure can only ever be a starting point.
Where does the Age Pension fit in?
For most Australians, it is not a fallback. It is part of the plan from the beginning.
The maximum Age Pension from 20 March 2026 is $1,200.90 a fortnight for a single person, around $31,223 a year, and $1,810.40 a fortnight combined for a couple, around $47,070 a year. Those amounts include the pension and energy supplements, and rates are indexed on 20 March and 20 September each year. Age Pension age is 67.
Set against the comfortable benchmark, the full Age Pension covers roughly half of a single person's budget and around three-fifths of a couple's. That gap is the job super is doing. It also explains why the couple's lump sum is only around $100,000 higher than the single figure despite a much larger annual spend — two Age Pensions do a lot of the work.
The pension is means-tested on income and assets, and because super counts towards those tests, entitlement typically rises as a balance is drawn down. Our companion article works through how the two interact.
How does that compare with what Australians actually have?
The gap is substantial, and the way it is usually reported overstates how typical the average is.
ATO data for 2023-24 shows the average super balance for Australians aged 60 to 64 was $413,700 for men and $327,400 for women — a difference of $86,300. But the medians for that age group are $236,126 and $174,655. The averages are pulled upwards by a relatively small number of very large balances, so the median is the more useful comparison for most people.
Against a $630,000 benchmark, a median balance at 60 to 64 sits well short. That is not a system failure — the Age Pension exists precisely to fill that space — but it does mean a comfortable lifestyle as ASFA defines it is above, not at, the typical outcome.
What moves the number in the years before retirement?
Four levers, and their relative power shifts as you get closer to 67.
Contributions still matter in the final decade, and often matter more than people expect, because there is less time for compounding to do the work and each dollar contributed is a dollar that arrives. The combined concessional contributions cap for 2026-27 is $32,500, covering employer superannuation guarantee, salary sacrifice and any personal contributions claimed as a deduction together. The non-concessional cap is $130,000, with a bring-forward of up to $390,000 available to eligible members under 75. Our contributions articles work through the eligibility rules.
Fees compound in the same way returns do, in the other direction. Investment option choice is one of the levers affecting long-term outcomes, alongside contributions and fees. And how many accounts you hold determines how many sets of fees and insurance premiums are being deducted.
Otivo's retirement planning module estimates what your position looks like and what could improve it, taking into account Age Pension eligibility, downsizer contributions, age, salary, super balance, other investments, lifestyle goals and super access age.
Frequently asked questions
Is $500,000 enough to retire on in Australia?
It sits between ASFA's modest and comfortable benchmarks for a single homeowner, so it would support something better than modest without reaching comfortable on those definitions — assuming home ownership and a part Age Pension. For a couple it is closer to comfortable, because two Age Pensions carry more of the budget.
Do the ASFA figures assume you own your home?
Yes. Both the comfortable and modest figures above are for homeowners aged 65 to 84. ASFA publishes separate figures for retirees who rent privately, and those annual budgets are substantially higher because rent replaces council rates and maintenance.
How long does super need to last?
ASFA's standards are built around retiring at 67 and living to an average life expectancy of about 85, so roughly eighteen years. Many people live considerably longer, which is why longevity is generally treated as a planning risk rather than a fixed figure.
Does the Age Pension increase as super runs down?
Generally, yes. Age Pension entitlement is assessed under income and assets tests, and super counts towards both once you reach Age Pension age. As a balance reduces, entitlement typically increases, which is why the two are designed to work together rather than as alternatives.
The headline number is useful once you know what is inside it: a top-up amount, drawn to zero, alongside a part Age Pension, for a homeowner. Otivo is a licensed digital advice provider holding AFSL and Australian Credit Licence No. 485665, and our retirement planning module works out what those three inputs look like for your situation.
Sources
- ASFA Retirement Standard, March quarter 2026.
- ASFA Retirement Standard Explainer, lump sums revised February 2026.
- ASIC MoneySmart, ASFA Retirement Standard.
- Services Australia, Age Pension rates effective 20 March 2026.
- ATO taxation statistics 2023-24, super balances by age.
- ATO, contributions caps 2026-27.
Disclaimer
The information in this communication is current as at August 2026 and has been prepared by Otivo Pty Ltd ABN 47 602 457 732, AFSL and Australian Credit Licence No. 485665. This content is general information only and has been prepared without taking into account your objectives, financial situation or needs. It is not personal financial or taxation advice and should not be relied on as such. Before acting on any information, you should consider its appropriateness having regard to your personal circumstances. This material must not be reproduced in whole or in part, or posted on any social media platform, without the prior written consent of Otivo Pty Ltd.