In Australia, superannuation is a popular tool to build wealth for retirement.

It’s tax effective too, and you can also use your superannuation to build a passive income to live off in your retirement years.

But by investing your superannuation wisely, you will benefit from lower tax rates, compound growth, and then eventually a retirement lifestyle boosted by a tax-free passive income.

The question is, how much do you actually need in your superannuation to receive the passive income you want?

Let’s break it down, using $10,000 per month as an example.

How much superannuation do I need to earn $10,000 of monthly passive income?

First, you need to work out what $10,000 in passive income every month totals over the year. 

So, $10,000 x 12 = $120,000.

Then you need to divide your annual passive income by the dividend yield of your overall portfolio. 

For example, $120,000 ÷ 2% = $6 million (that’s the portfolio size you’d need).

The only catch is that the answer varies depending on your dividend yield.

That means a super portfolio with a dividend yield of around 4% only needs to be half the size of one with a dividend yield of around 2% to generate the same level of passive income.

Which is good news because a $6 million superannuation balance is out of reach for the majority of Australians.

Ok, so how much do I need to earn $10,000 off a 4%, 5% or 6% yielding portfolio?

We already know what portfolio size you’d need to earn $12,000 per year (the equivalent of $10,000 per month) off a 2% yielding account.

But if your overall portfolio has a slightly higher dividend yield of around 4%, you’ll need a balance of around $3 million to earn the same $120,000 per year in passive income.

If the yield of your portfolio is higher still, at around 5% for example, your balance would need to be closer to $2.4 million to earn the same dividend income.

For a 6% yielding portfolio, you’d need a superannuation balance closer to $2 million to earn the same amount again.

And so on…

You’d still earn $120,000 per year in passive income from each of these superannuation balance sizes.

I’m aiming for a 5% yielding superannuation portfolio, which ASX shares can I invest in?

To earn a $120,000 passive income off a 5% yielding portfolio, you’d need around $2.4 million saved. 

But note, if you want a portfolio yielding around 5%, it doesn’t mean that every investment in your portfolio has to yield that level. It can be a combination that yields 5% overall.

These are my top picks.

Defensive shares like Telstra Group Ltd (ASX: TLS), Sonic Healthcare Ltd (ASX: SHL), Origin Energy Ltd (ASX: ORG) or Amcor PLC (ASX: AMC) are a solid choice for income-seeking investors. These all yield around the 5% to 6% level, at the time of writing.

Non-discretionary ASX consumer staples stocks are also naturally defensive, but many of them yield slightly less. Supermarket giants like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) can generate stable cash flow across all phases of the economic cycle. This translates to consistent dividends for shareholders. These shares pay around 3%, at the time of writing. 

Then there are your popular ASX mining shares. These are more cyclical, but such stocks usually rebound strongly during recovery. BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG) and Rio Tinto Ltd (ASX: RIO) are popular options. These yield anywhere between 3.5% and 6.5% at the time of writing. 

The post How much do I need in my superannuation to earn $10,000 passive income every month? appeared first on The Motley Fool Australia.

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• Post-earnings: I’d buy these ASX dividend stocks for income today
• How I’d target $5,000 a year in passive income from ASX shares
• Why is everyone talking about China and BHP shares today?
• These ASX shares benefit from a high Aussie dollar

Motley Fool contributor Samantha Menzies has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Amcor Plc and Telstra Group. The Motley Fool Australia has recommended BHP Group and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

For many Australians, $1 million in superannuation sounds like the magic retirement number. But can that balance realistically deliver $60,000 a year without running out too soon?

The answer depends on more than the size of your nest egg. Your age, investment returns, spending habits, inflation, housing situation and access to the Age Pension can all materially change the equation.

The simple maths

At first glance, the calculation looks encouraging. Taking $60,000 from a $1 million superannuation balance represents a 6% annual withdrawal rate. If the investments inside the super fund generate more than 6% over time, the capital could potentially last for many years.

But investment returns aren’t guaranteed, and retirees need to account for periods when markets fall. Taking withdrawals during a market downturn can accelerate the depletion of a portfolio.

That’s why a $1 million balance doesn’t automatically translate into $60,000 of sustainable annual income.

A million is a substantial balance

It is worth putting that figure into perspective. The Association of Superannuation Funds of Australia (ASFA) currently estimates that a single homeowner aged 67 needs around $630,000 in superannuation to fund a comfortable retirement, while a couple needs $730,000. Those estimates assume retirees draw down their capital and receive some Age Pension.

ASFA’s latest retirement budget puts the annual cost of a comfortable lifestyle at $55,923 for a single person and $78,566 for a couple aged 65 to 84.

That suggests $1 million is not an insignificant amount. In fact, for a homeowner, it could provide a considerable buffer above the current ASFA benchmark.

However, the circumstances are very different for someone renting. Housing costs can dramatically increase the amount of retirement income required.

Age Pension changes the equation

Another important consideration is that superannuation doesn’t necessarily have to fund the entire $60,000. A retiree may qualify for a full or part Age Pension, depending on their circumstances and the relevant income and assets tests. That means a $1 million super balance could potentially be combined with government support.

But there is a catch: relying on a fixed withdrawal rate ignores how long the money needs to last. Someone retiring at 67 could potentially need to fund several decades of retirement. Market volatility, inflation and rising healthcare costs can all put pressure on the portfolio.

Foolish takeaway

A $1 million super balance gives a retiree a strong starting point for targeting $60,000 of annual income, particularly if they own their home and qualify for some Age Pension.

But investors shouldn’t view 6% as a guaranteed income rate. A more conservative strategy could mean withdrawing less during weak markets and more when investment returns are strong.

The key lesson is that retirement planning isn’t simply about hitting a magic super balance.

For someone targeting $60,000 a year, $1 million in superannuation could be enough, but the sustainability of that income will ultimately depend on how the money is invested, withdrawn and supplemented throughout retirement.

The post Is $1 million in superannuation enough for a $60,000 retirement income? appeared first on The Motley Fool Australia.

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• 4 high conviction ASX stock picks from Canaccord Genuity
• $10,000 a year in passive income buying just $10k worth of ASX shares? Here’s how I’d go about it
• How much do I need in my superannuation to earn $10,000 passive income every month?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It was an interesting start to the trading week for the S&P/ASX 200 Index (ASX: XJO) and many ASX shares this Monday.

After ending last week on a somewhat sour note, investors came back from the weekend with a bit of a spring in their steps this morning. That enthusiasm faded somewhat over the day, but the ASX 200 still managed to close 0.056% higher. That leaves the index at 9,010.9 points.

This lukewarm start to the Australian trading week followed a far more downbeat end to the American trading week on Friday night (our time).

The Dow Jones Industrial Average Index (DJX: .DJI) had a tough session, dropping 0.51%.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) fared a little better, but still fell 0.29%.

But let’s get back to this week and our local markets now for an examination of how the various ASX sectors performed this Monday.

Winners and losers

We had plenty of winners and losers today.

Leading the latter were tech shares. The S&P/ASX 200 Information Technology Index (ASX: XIJ) had an awful time of it today, plunging 2.6%.

Gold stocks were also out of favour, with the All Ordinaries Gold Index (ASX: XGD) tanking 1.24%.

Utilities shares weren’t much better. The S&P/ASX 200 Utilities Index (ASX: XUJ) sank 0.99% this Monday.

Healthcare stocks weren’t riding to the rescue either, illustrated by the S&P/ASX 200 Healthcare Index (ASX: XHJ)’s 0.0.81% dive.

Communications shares found themselves on the losing team as well. The S&P/ASX 200 Communication Services Index (ASX: XTJ) was clipped by 0.76%.

We could say something similar for consumer staples stocks, with the S&P/ASX 200 Consumer Staples Index (ASX: XSJ) drifting down 0.6%.

Its consumer discretionary counterpart was in a similar boat. The S&P/ASX 200 Consumer Discretionary Index (ASX: XDJ) lost 0.46% this session.

Our last red sector was real estate investment trusts (REITs), as you can see from the S&P/ASX 200 A-REIT Index (ASX: XPJ)’s 0.06% slip.

Turning to the green sectors now, it was energy stocks that shone the brightest. The S&P/ASX 200 Energy Index (ASX: XEJ) surged 1.78% higher this Monday.

Mining shares were in demand too. The S&P/ASX 200 Materials Index (ASX: XMJ) enjoyed a 0.42% lift today.

Industrial stocks also fared well, with the S&P/ASX 200 Industrials Index (ASX: XNJ) adding 0.2% to its total.

Finally, financial shares managed to close the day with a rise, evidenced by the S&P/ASX 200 Financials Index (ASX: XFJ)’s 0.15% bump.

Top 10 ASX 200 shares countdown

Property stock Ingenia Communities Group (ASX: INA) was our top stock this Monday. Ingenia shares rocketed 14.79% higher today and closed at $4.19 each. This sharp surge was sparked by a takeover offer from a private equity firm.

Here’s the rest of today’s best:

ASX-listed company	Share price	Price change
Ingenia Communities Group (ASX: INA)	$4.19	14.79%
Elders Ltd (ASX: ELD)	$6.70	7.89%
Whitehaven Coal Ltd (ASX: WHC)	$8.98	7.03%
Generation Development Group Ltd (ASX: GDG)	$3.36	5.99%
IperionX Ltd (ASX: IPX)	$3.12	5.41%
Pinnacle Investment Management Group Ltd (ASX: PNI)	$14.97	4.91%
New Hope Corporation Ltd (ASX: NHC)	$6.35	4.10%
Yancoal Australia Ltd (ASX: YAL)	$6.37	3.92%
Silex Systems Ltd (ASX: SLX)	$5.16	3.41%
Fortescue Ltd (ASX: FMG)	$17,77	3.19%

Our top 10 shares countdown is a recurring end-of-day summary that shows which companies made big moves on the day. Check in at Fool.com.au after the weekday market closes to see which stocks make the countdown.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

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• These ASX shares benefit from a high Aussie dollar
• Why are Ingenia shares soaring today?
• Ingenia Communities Group rejects takeover offer, backs growth strategy

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has recommended Elders and Generation Development Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.