Experts have revealed the amount of superannuation you must have in your savings at what age to live a comfortable retirement.
They say a couple needs $640,000 in super savings at retirement, while singles need $545,000, assuming they use all their retirement funds and receive a part-age pension.
The figures are based on a couple or single person having no mortgage or rent to pay for.
A comfortable life is defined as one that allows a healthy retiree to enjoy leisure activities, buy household goods, private health insurance, a good car, good clothes, electronic equipment, and travel.
So, how do you know if you’re on the right track?
According to Australia’s peak superannuation industry body, a 25-year-old average worker needs only $17,000 in their super today to reach $545,000 by age 67.
A 35-year-old requires $93,000, a 45-year-old should be at $195,000; a 55-year-old should have $330,000, and a 65-year-old — two years from pension age — would require $503,000.
Camera IconA couple needs $640,000 in savings at retirement, while singles need $545,000. iStock Credit: Supplied
The Association of Superannuation Funds of Australia (ASFA) calculation assumes a yearly pre-tax wage income of just under $65,000.
ASFA deputy CEO Glen McCrea said the goal was to get as many people to reach what ASFA terms a comfortable standard, but at the moment, only a fifth of working-age Aussies was going that level.
“A comfortable standard means you can go to the pub and have a meal, you can have that cup of coffee, when you’re at retirement age you can buy your grandkids a present, you can get your car fixed,” Mr. McCrea said.
“To get there, you’re looking at, for a couple, of the balance of around $640,000 or a single person $545,000.
“The reality is about 20 percent of people get there.”
The shortfall could stem from a failure by some to contribute high amounts to super during their working life, he said.
But with increases to superannuation guarantee payments employers must make to workers under law, the gap would reduce, Mr. McCrea said.
Camera IconAussies are advised to assess their super balance regularly to ensure they’re on track. Credit: Supplied
From July 2021, the regular compulsory contributions employers made to their employees’ accounts, rose from 9.5 percent to 10 percent of their wages, affecting about eight million mainly private sector workers.
This would increase to 10.5 percent on July 1 and reach 12 percent in 2025-26, in line with current law.
“We estimate by going to 12 percent in a couple of years, by 2050 you get 50 percent of the population there (to the comfortable standard),” Mr. McCrea said.
“There is hope, and super is a long-term prospect, so there is hope for people getting higher super balances to get more dignity in retirement as they get older.”
Mr. McCrea said during the pandemic, many people withdrew from their super to deal with financial challenges but had not replenished the funds when they could.
And with the rising cost of living, people may feel now is not a good time to make extra payments to secure their nest egg.
Camera IconChipping extra money into super when you can help boost your nest egg. Credit: News Regional Media
“Things are tough at the moment, but when you may have that extra pay cheque or that little bonus or have been working a few extra shifts, see if you can chip it back into super because every dollar certainly counts as you head towards retirement,” he said.
“The good thing about superannuation is it is compulsory, and often you don’t notice it’s going in there, and then over many years, it slowly compounds away and gives you a good balance.
“Obviously, when things are tough, like now, there may not be the capacity for people to contribute because the cost of living is going through the roof.
“However, in five or ten years’ time, let’s assume the economy’s looking better, inflation is under control, that could be a good time, where if you’re behind a little bit, to try and catch up.
“So keep engaging with your super, look at your balance, talk to your fund, and look for those opportunities to contribute when possible.
“Get familiar with it and try to understand, ‘Am I on track’?
“If people contribute 12 percent for most of their life, they should get to a comfortable level.”
