Whether you’re 26 or 66, knowing how your super balance stacks up against others your age and what you should be aiming to have at your age, can help you determine if you’re on track towards being able to fund a ‘comfortable retirement’.
-
-
- How much super do I need for a ‘comfortable retirement’?
- How much super do I currently have?
- What’s the average super balance by age, and is it enough to monitor for a relaxed retirement?
- What to do if there is a gap in my super
-
How much super do I need for a ‘comfortable retirement’?
According to the Association of Superannuation Funds of Australia Limited (ASFA) Retirement Standard, for those wanting a ‘comfortable retirement,’ the average super balance at retirement should be around $640,000 for couples and around $545,000 for singles.
These figures presume you own your own home with no mortgage, cover daily essentials, as well as spend on things like home improvements, dining out, exercise and hobbies and occasional holidays You may also want to consider what your life will look like during retirement, e.g., will you be in good health, how long might you live, and do you think you’ll need to pay for aged care?
When assessing your desired balance for retirement, a good idea is to think about what you want to spend money on. A ‘modest retirement’ lifestyle for example, is considered better than the Age Pension, but still only enough to be able to afford basic activities. It is all dependant on getting the most out of your super.
How much super do I currently have?
You can see today’s super balance when you sign in to your super account. You can then compare it against the current average balance for your age group as well as ASFA’s suggested average balance for your age.
Always remember different assets generally deliver different returns, so it’s a good idea to check in regularly with diversification of your super investments and how you deal with risk.
What’s the average super balance by age, and is it enough to track towards a ‘comfortable retirement’?
Research tells us there’s a gap between how much people have in their super now, and how much they need to fund their post-working years.
So, what are the current average balances for different age groups?
| Age Bracket | Male | Female |
| 25 -29 | $25,173 | $21,774 |
| 30 -34 | $51,175 | $42,240 |
| 35 – 39 | $83,723 | $66,611 |
| 40 – 44 | $121,119 | $92,680 |
| 45 -49 | $165,587 | $122,228 |
| 50 -54 | $214,795 | $157,124 |
| 55 -59 | $286,283 | $209,653 |
| 60 -64 | $359,870 | $289,179 |
Your super balance is closely linked to paid work, and women currently earn around 14% less than men.
Are these average balances enough to be tracking towards a ‘comfortable retirement’?
How much is ‘enough’, is different for every individual. The experts suggest that on average, there’s a potential shortfall in today’s super balances to be on track for a ‘comfortable retirement’.
How do I take action if there’s a gap?
If you’re looking at your super balance and believe its below the mark, and think your balance could do with a boost, here’s some things you could consider doing:
1. Get the basics of your super sorted
By ensuring your super account is set up correctly can help get you on the right track for growing your super balance. Some simple things include recording your Tax File Number (TFN) so you don’t pay any unnecessary tax, and keeping your personal details updated so your super fund can contact you with any important information.
2. Pay yourself back
If you were approved to access your super early as a part of the COVID-19 early access program, it’s a good idea to try and pay those funds back to yourself if you’re in a financial position to do so. You could talk to your employer about a salary sacrifice arrangement, or make some voluntary contributions yourself over time.
3. Start contributing as early as you can and as regularly as you can
Your super earnings follow the same principle as compounding, and generally, the earlier you can put money in, for example, with salary sacrifice, and the more regular your contributions, the better chance your super has to grow.
4. Consolidate your super accounts
More than 6 million Australians have more than one super account. If you’re one of these people, it’s worth thinking about consolidating them into one account. The money you may save in multiple fees could stay invested and really help grow your overall super balance.
5. Add more to your super if you can
By adding more money to your account each year – above the 10.5% (as at 1 July 2022) you normally receive from your employer – you’ll give your super the opportunity to grow faster and bigger.
6. Check in with your investment options over time
Investing your super at every age of your life is important. However, it’s worth checking in with your investment strategy, as the same one may not be appropriate for every life stage.
For a more in-depth discussion on your finances and your super, contact Financailly Sorted on (03) 9888 3175 or on [email protected]