A homeowner couple aged 65 with $1 million in super could spend about $84,500 a year and have it last to 95, in our projection. Spending ASFA’s comfortable $78,998 a year, their money lasts past 100. From 67 the Age Pension adds about $13,082 a year, rising as their balance falls. Set aside a 2-year cash buffer, invest the rest in a low-cost core ETF plus satellites, and stress-test the plan for a market fall.
“Is $1 million enough to retire?” is one of the most common questions we get. The answer depends on what you spend, the Age Pension and how you invest. Here’s a realistic Australian example, worked through with our free retirement plan, plus the parts of my videos where I explain each step.
The example: a couple, 65, with $1 million
- Homeowner couple, both 65, retiring now.
- $1 million in super, moved into account-based pensions (tax-free income after 60).
- $50,000 in other assets: cars, contents, a caravan.
- A 6% a year return after fees and 2.5% inflation. Everything below is in today’s dollars.
🎥 Watch me explain this
▶1:37Start with income, not a lump sumHow much do you need to retire in Australia? · from 1:37 · read the post- ▶6:29The four retirement tiersHow much do you need to retire in Australia? · from 6:29 · read the post
How much can you spend?
ASFA’s Retirement Standard puts a comfortable retirement for a homeowner couple at $78,998 a year and a modest one at $52,690 (June 2026 quarter). Your own number matters more: start with what you spend now, and expect to spend a bit less in your 80s.
🎥 Watch me explain this
- ▶3:12The 20× rule and where 5% comes fromHow much do you need to retire in Australia? · from 3:12 · read the post
- ▶5:13Lever 1: spendingHow much do you need to retire in Australia? · from 5:13 · read the post
Year by year
The balance falls slowly at first, then the Age Pension takes over more of the income. A 25% fall in the first year is the hardest test, because it hits when the balance is highest.
The Age Pension
The Age Pension starts at 67. Centrelink works it out under the assets test and the income test and pays the lower amount. At 67 the couple’s balance is about $903,278. Add $50,000 of other assets and the assets test gives them about $13,082 a year. It reaches the full $48,516 a year at about age 91.
For a homeowner couple, the full pension is $48,516 a year while assessable assets are below $499,000, and it reduces by $78 a year for every $1,000 above that, stopping at $1,121,000. Your home isn’t counted.
🎥 Watch me explain this
- ▶5:54Lever 2: the Age PensionHow much do you need to retire in Australia? · from 5:54 · read the post
The portfolio: buffer, core and satellites
The buffer pays the pension: the couple draws on cash, not shares, and tops it up from the core after good years. More in ETFs for retirement: a core and satellite blueprint and the Retirement & SMSF hub.
🧮Visualise your retirement portfolioEnter your super and the income you need: see your cash buffer, core and satellites, and whether your money lasts.
See how a cash buffer pays your pension, and whether your money lasts, in good years and bad.
Illustration only, general information. Assumes cash earns 4%, the core 7% and satellites 8% a year after fees in normal years, and income rises with inflation at 2.5% a year. “A crash in year 1” assumes the core falls 25% and satellites 35%, then recover over two years; “Two bad years” assumes two falls in a row. Each year your income is paid from the cash buffer; after a good year the buffer is topped back up from your investments, after a bad year it isn’t, so you never sell shares after a fall unless the buffer runs out. Ignores tax and super pension minimums. Age Pension is estimated each year from your balance under the assets and income tests (homeowner rates from 20 September 2026, $50,000 of other assets, limits rising 2.5% a year); your actual entitlement depends on Centrelink. Real returns will be different.
🎥 Watch me explain this
▶1:06The core and satellite approachHow to build a retirement portfolio with ETFs (Australia) · from 1:06 · read the post- ▶7:33The 3-year cash bufferHow to build a retirement portfolio with ETFs (Australia) · from 7:33 · read the post
▶54:25Holding cash: the bank or an ETF like AAA?Live ETF Q&A: Cash is king while markets shake out · from 54:25 · see the Q&A notes
What portfolio should you build with $1 million?
We use three parts: a cash buffer to pay your pension, a core for long-term growth and satellites for parts of the market the core doesn’t hold much of.
- Choose a core you can hold through a fall. VDGR (about 70% shares), VDHG (about 90%) or DHHF (100%). We wouldn’t go more conservative than a 70/30 fund like VDGR, even in retirement; the buffer manages the short-term risk.
- Satellites: 6 to 10 small holdings, bought only while trending up, and held in cash while nothing is setting up.
- Refill the buffer after good years, never after bad ones.
🎥 Watch me explain this
- ▶2:55Your core ETF options by ageHow to build a retirement portfolio with ETFs (Australia) · from 2:55 · read the post
- ▶4:33Satellite ETFs for growth and incomeHow to build a retirement portfolio with ETFs (Australia) · from 4:33 · read the post
▶52:20“If you were in pension phase, which core would you use?”Live ETF Q&A: Tech breaks down as the Aussie market finds its feet · from 52:20 · see the Q&A notes
What can go wrong
- A big fall early on does the most damage. That’s what the cash buffer is for.
- Living longer. Plan to at least 95; one partner often lives well into their 90s.
- Spending creep, aged care costs and rule changes to the Age Pension, deeming and super.
- Selling in a panic. A written plan helps you stay invested.
🎥 Watch me explain this
- ▶7:17Sequence of returns riskHow much do you need to retire in Australia? · from 7:17 · read the post
▶5:48What to do when markets fallWhere Does the Money Go When the Market Crashes? · from 5:48 · read the post
Opens our free retirement plan with this example filled in. Change it to yours and download the PDF.
General information only, not personal advice. It doesn’t consider your objectives, financial situation or needs. Projections are illustrations based on the assumptions shown and aren’t guaranteed. Age Pension figures from Services Australia rates and limits at 20 September 2026; your entitlement depends on Centrelink’s assessment. ETFs named are examples, not recommendations; consider the PDS and TMD. Past performance is not a reliable indicator of future performance.
Frequently asked questions
Is $1 million enough to retire in Australia?
For a homeowner couple aged 65, $1 million could fund about $84,500 a year to age 95 in our projection, including the Age Pension from 67. That assumes a 6% return after fees and 2.5% inflation; your result depends on your spending, returns and circumstances.
How much Age Pension would a couple with $1 million get?
At 67, after two years of drawing an income, a homeowner couple would have about $903,278 left and get about $13,082 a year under the assets test (20 September 2026 rates). The pension rises as the balance falls.
How should I invest $1 million in retirement?
Our approach: hold about two years of spending in cash to pay your pension, then invest the rest about 80/20 between a low-cost diversified core ETF and 6 to 10 satellites bought only when they’re trending up.
What if markets crash early in retirement?
A 25% fall in the first year is the hardest test. In this example, spending $78,998 a year, the money would last age 94. A cash buffer means you don’t have to sell shares after a fall.