A superannuation balance of $2.5 million would support a retirement income of about $143,000 annually, according to MLC’s latest projections. This level allows retirees to allocate roughly $10,000 monthly to daily living expenses while retaining $20,000 yearly for discretionary spending like travel. Those with lower fixed costs could redirect even more toward international travel, leisure activities, or vehicle replacement.
MLC’s analysis exposes a significant disparity between what Australians believe they need in retirement and official benchmarks for a comfortable lifestyle. The Association of Superannuation Funds of Australia defines a comfortable retirement for a single homeowner as a $630,000 super balance, covering private health insurance, occasional dining out, a domestic holiday, and an overseas trip every seven years. However, a 2025 MLC survey of 2,500 Australians revealed that 65% aimed for at least $750,000, while 10% targeted over $2 million. This suggests most seek greater financial flexibility than standard guidelines allow.
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Achieving $2.5 million by age 67 demands substantial savings, even for high earners. MLC’s projections assume a starting salary of $200,500 at age 25, growing by 3.5% annually, with 12% Super Guarantee contributions plus an extra 2% salary sacrifice. Under these conditions, savings grow modestly at first: $30,000 at 25 becomes $330,800 by 35 and $774,900 by 45. Nearly 80% of the final sum accumulates between ages 55 and 67, demonstrating how compounding accelerates in later decades.
Tax rules and super strategies
MLC’s modelling confirms that even $2.5 million provides significant cushioning, though careful management of variables like healthcare costs, inheritance goals, or housing arrangements is essential. Tax regulations and government policies introduce additional complexity. Superannuation contributions are capped at $32,500 annually for concessional contributions in 2026-27. High earners with balances under $500,000 can carry forward unused caps from the past five years, while those aged 55 or older can contribute up to $300,000 from selling a family home under downsizer rules. These strategies require advance planning, as super funds remain locked until release conditions are met.
By age 60, a $2.5 million target remains unattainable for most, even with disciplined saving. MLC’s projections assume 6% annual returns until 55, dropping to 5.5% afterward—a conservative estimate given market fluctuations. Inflation, rising healthcare costs, and potential policy changes could further reduce purchasing power, widening the gap between aspirations and reality.
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The critical decades for growth
MLC’s breakdown of incremental steps to reach $2.5 million by age 67 reveals how early contributions establish the foundation for later growth. For example, someone starting at age 25 with a $30,000 balance would need to accumulate roughly $165,400 by 30 to stay on track. By 40, the required balance rises to $576,500, and by 50, it reaches $1.07 million. Without consistent savings, the gap between goals and reality expands sharply after 50, as later years demand much larger sums to compensate for lost time.
A $1.25 million balance, generating about $83,000 annually, still requires careful planning. MLC’s projections show this target demands around $165,400 by age 30, $576,500 by 40, and $1.07 million by 50. While less aggressive than the $2.5 million path, it demonstrates how early savings differences can lead to vastly different outcomes by retirement. These figures reflect a high earner’s trajectory, meaning most Australians would need supplementary strategies, such as after-tax contributions or property investments, to bridge the gap.