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Superannuation shortfall: 4.6 million Australians are too poor to retire

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Millions of Australians won't be able to financially support themselves when they stop working, according to new research by Finder.

A Finder survey of 1,063 respondents found 23% of Aussies – equivalent to 4.6 million people – admit they don't have enough money in their super fund or other investments to get by in retirement.

The research found a further 27% admit they are not sure if they will have enough money to survive once they leave the workforce.

1 in 10 (11%) said their retirement balance is too low but they will have enough in other investments to get by once they say farewell to working.

Women are worse off with 27% admitting they won't have enough in super or other investments, compared to 18% of men.

Sarah Megginson, money expert at Finder, said millions of Australians don't have enough in superannuation to support themselves into the future.

"Superannuation is something many Australians, including the younger demographic, don't engage in enough.

"It can be a sad case of 'too little too late' for many who realise that by the time they reach retirement age, their super balance will fall well short of the amount of money they will need.

"The Age Pension is asset-tested in Australia so you may not qualify."

Megginson urged Aussies to take a couple of steps to engage with their super now.

"First, it's essential to know how much you have in super and to consolidate your funds. You pay fees for each fund you have – it's like having your savings split across 3 savings accounts and paying account-keeping fees on all of them.

"It makes so much sense to bring it all together and spend less on fees, so more money stays in your name, working towards building your wealth."

Megginson said those in a position to do so should also consider contributing to their super balance, by forgoing some of their pay through salary sacrifice.

"Any income earned within your super is capped at a maximum tax rate of 15% per annum. If you currently pay say 32.5% tax, you're ahead immediately.

"For instance, if you salary sacrifice $1,000 over 12 months, you'd pay $150 on that income and $850 will go to super where it will be invested for your future. Otherwise, you'll pay $325 tax on that money and have $675 in your bank account.

"Obviously once you put the money into super you can't get it back out so start small – but even $100 a month would make a difference thanks to compounding interest."

Megginson said consumers should also make sure their super fund is good value for money.

"Make sure you aren't stuck in a fund charging exorbitant fees and check regularly that your employer is paying your 11% Superannuation Guarantee contributions on time."

Finder's research shows just over 1 in 5 (22%) Australians say they will have enough to get by but will probably have to cut back on their spending.

Do you think you'll have enough superannuation to get by in retirement?
I'm not sure if I will or not27%
No, not in my super or other investments combined23%
Yes, I'll have enough to get by but will probably have to cut back on my spending22%
Yes, I'm confident I'll have enough money to live comfortably in retirement17%
No, not in my super, but I'll have enough through other investments11%
Source: Finder survey of 1,063 Australians, September 2023

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