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*Past performance data is for the period ending December 2018.
How much super should I have at my age?
OK, so now you’ve got a rough idea of how much super you’ll need when you actually retire, but how do you work out whether you’re on track to reach that goal? For example, how much super do you need at age 40 or 50 to be able to afford to retire whenever you want, be that at 65, 70 or any other age?
There are plenty of handy online calculators that you can use to work out how your super is tracking and whether you’re on target to reach your retirement goal. Many super funds offer these calculators through their websites or member portals, while there’s also a handy retirement planner available on the Australian Securities and Investments Commission’s MoneySmart website.
You may also want to take a look at the average super balances for Australians in your age bracket. Use the table below to get an idea of how you’re tracking relative to your peers:
Mean superannuation balance 2015-16
|15 to 19 years||$485|
|20 to 24 years||$5,501|
|25 to 29 years||$21,372|
|30 to 34 years||$38,386|
|35 to 39 years||$56,715|
|40 to 44 years||$80,899|
|45 to 49 years||$114,616|
|50 to 54 years||$135,290|
|55 to 59 years||$180,689|
|60 to 64 years||$214,897|
|65 to 69 years||$207,105|
|70 to 74 years||$76,049|
|80 to 84 years||$42,912|
|85 years and over||(estimated) $14,374|
Source: Survey of Income and Housing, Australia, 2015–16, Australian Bureau of Statistics
Do Australians have enough super?
Unfortunately, many Australians simply do not have a large enough superannuation balance to see them through their retirement years. In 2015-16, average superannuation balances at the time of retirement (assumed to be age 60 to 64) were $270,710 for men and $157,050 for women. As you can see in the table above, these average amounts fall well short of the lump sum needed to enjoy even a modest lifestyle.
MLC’s Quarterly Australian Wealth Behaviour survey has also produced some alarming data, with the latest survey revealing that more than half of Australians don’t think they’ll have enough super to retire on. Even worse, one in three Australians believe they’ll have “far from enough” super to call on when they leave the workforce.
However, there is some good news. ASFA has reported that while only around 20% of Australian retirees have reached a comfortable standard of living, this figure is expected to increase to about 40% by 2040. This forecast includes the scheduled increases in Super Guarantee (SG) payments, which should see them rise to 12% of your earnings by 2025.
Can my super be supplemented by the Age Pension?
If our mean superannuation balances are well below what’s needed to live comfortably or even modestly in retirement, how do current retirees survive? This is where the Age Pension comes in. In 2016 the pension was actually the principal source of income for 70% of retirees aged 45 and over, and depending on your assets you could qualify for a part or full pension.
To figure out whether or not you'll be eligible to apply for the Age Pension, read our comprehensive guide on Age Pension eligibility requirements.
How to make sure you have enough super
Worried you won’t have enough super to live the lifestyle you want in retirement? Keep the following tips in mind to help boost your retirement savings:
- Search for lost super. Changed jobs, changed address or changed your name? By finding your lost super, you could provide a dramatic boost to your retirement funds.
- Consolidate your super. If you have multiple superannuation accounts, consider consolidating them into one single account to save on fees. However, make sure you’re aware of any exit fees before you consolidate, and remember to check whether you will still have adequate insurance cover in place.
- Consider your investments. You may wish to think about how your super is invested. For example, if you want maximum possible capital growth, you may need to switch to a more aggressive investment portfolio to increase the chances of reaching your financial goal.
- Salary sacrifice. If your employer offers salary sacrificing, you can contribute extra funds to your super and take advantage of the fact that they will be taxed at a reduced rate. It’s a great way to automate the process of boosting your super balance.
- Make personal contributions. You may also want to consider making personal tax-deductible contributions (capped at $25,000 per year) to your super, as well as making after-tax contributions (capped at $100,000 per year).
- Plan for a long retirement. How long do you think you’ll spend in retirement – 15 years? 20? 30? While the retirement age is going up, so too is the average life expectancy in Australia, with retired men expected to live to 86 years and retired women to the age of 90. Make sure you’ve got enough super to cover you right through your golden years.
- Know your tastes. The ASFA Retirement Standard is an extremely useful tool when calculating how much super you need; however, it’s worth remembering that the definitions of modest or comfortable lifestyles are extremely personal. What represents a modest lifestyle for one retiree might seem like borderline luxury to another, so make sure you’ll have enough to fund the exact lifestyle you desire.
- The 67% rule. Another method sometimes suggested to calculate how much super you need is to assume that you need 67% (or two-thirds) of your yearly income in retirement. So if you were earning $100,000 a year, you’d need enough super to cover annual living expenses of $67,000. However, this method is only viable for people who earn an above-average income.
- Think of your children. Remember to not only consider how much super you need to see out your retirement, but also whether you want to leave money to your children when you pass away. If you do want to leave a little nest egg behind, you may need a bigger super balance than you think.
Retirement may seem like it’s still a long way off, but taking action now could be crucial to ensure that you have enough super tucked away. Now is the perfect time to review your super balance, calculate how much you’ll need to enjoy a comfortable retirement, and then start thinking about how you can make those two figures meet.
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