Superannuation Update – Winter edition

In this quarter’s superannuation update…

• Reminder: employers note that the super guarantee rate increased to 12% as of 1 July 2025. 
• Insight: We take a look at some suggested figures for a ‘modest’ and a ‘comfortable’ retirement lifestyle, the difference between those definitions and what the average super balance at retirement age might be to achieve this.
• Tip: No matter how young or old you are, there are a few simple ways to help you maximise your superannuation. We share our top three tips.

Reminder

Employer SG Contributions Have Risen

As we are sure that you are aware, the minimum SG rate you must pay for each eligible employee has now increased to 12.00% of ordinary time earnings (OTE). This took effect from 1 July 2025.

A positive for all employees, not so positive for all employers.

For those employers using payroll software, like Xero, this should have automatically happened when the 1st July 2025 rolled around. If you are not sure, we recommend that you check.

Please note, increases in superannuation payable will also have the effect of increasing other payroll costs, such as Workcover and Payroll Tax liabilities as an employer.

Please also note, as an employer if the required rate of SG isn’t paid by the quarterly due date, then a Superannuation Guarantee Charge (SGC) will be payable to the ATO. The SGC includes all the SG amounts owing to employees, plus interest and an administration fee.

Employers who don’t pay the SG into the correct super fund by the due date must report and rectify the missed payment by lodging an SG Statement and paying the SGC.

Please contact us if you have any questions or feel unsure about super guarantee payments. 

Recent rate rises:

Rate

10.00%

10.50%

11.00%

11.50%

12.00%

Insight

What is the Average Superannuation Balance at Retirement Age? 

There is no official ‘retirement age’ in Australia. You can retire whenever you like; however, the term is often used in reference to when you are entitled to receive government support, or more specifically, the age pension. For people born on or after 1 January 1957, the ‘retirement age’ is 67 years. That’s when you can apply for the pension.

The full age pension, including all supplements, is $45,037.20 per year for couples and $29,874 per year for singles. For many retirees, that isn’t anywhere near enough to cover the basic costs of life in retirement — especially with the cost of living continuing to rise over the past couple of years.

You’ll need some savings, investments, or superannuation to cover the rest.

Superannuation plays a vital role in funding retirement because it’s mandatory.

Some people on low incomes can’t save or invest, but if they work, they receive superannuation by default.

You can access your superannuation after you reach preservation age, which depends on your date of birth. If you were born on or after 1 July 1964, your preservation age is 60. You also may need to retire or start a transition-to-retirement strategy while still working, to access your superannuation at this age. From age 65, you can access your superannuation even if you are still working.

What’s the average superannuation balance at age 67?

According to tax office data, the average superannuation balance for 65 to 69-year-olds is $404,553. The median is $198,715.

Men typically have more superannuation than women because women are over-represented in low-paying industries and tend to take more time off or work part-time for extended periods to look after their children.

The average superannuation balance for men at age 67 is $428,533, and the average for women is $379,483. The median superannuation balance for men is $206,091, and the median for women is $191,475.

Do retirees today have enough super for their retirement?

Based on the numbers above, Australians aged 65 to 69 do have enough superannuation to fund a ‘modest’ retirement. But not a ‘comfortable’ one; according to Australia’s Retirement Standard, which is the trusted definitive guide to budgeting in retirement.

Association of Superannuation Funds of Australia (ASFA) has specific definitions for a modest and comfortable retirement.

A modest retirement lifestyle enables retirees to cover basic living expenses and participate in a limited range of leisure activities. This lifestyle requires careful budgeting and prioritizing essential needs over discretionary spending. The latest update estimates that a modest retirement costs $48,184 per year for couples and $33,386 per year for singles.

In terms of super, a modest retirement requires a superannuation balance of at least $100,000 for couples and singles. This is a relatively low balance and reflects ASFA’s assumption that retirees with a modest lifestyle receive the full pension.

A comfortable retirement lifestyle allows for more financial flexibility, covering a wider range of activities, occasional overseas travel, and a higher standard of living. It includes expenditure on a more extensive range of goods and services, enabling a more fulfilling and varied retirement experience. A comfortable retirement costs $73,875 per year for couples and $52,383 per year for singles. It requires a super balance of at least $690,000 for couples and $595,000 for singles and assumes only a part-pension payment.

All of these figures assume retirees own their homes mortgage-free and receive an average 6% total annual return on their super savings. ABS data shows that the pension is the biggest source of income for retired Aussies today. The second biggest source is superannuation.

The reason the pension is the main source is partly because the Superannuation Guarantee was only introduced in 1992. Australians reaching so-called ‘retirement age’ (67 years) today were 34 years old in 1992. This means they haven’t had the benefit of super savings from day one of their working lives, the way many Gen Xers and younger generations have.

Therefore, they are more likely to need at least a part-pension along with their superannuation to fund their retirement. In the future, more Australians will be able to expect to fund their retirement from superannuation alone.

Are you eligible for the pension?

In June 2025, the Department of Social Services lifted the thresholds for the pension assets and income tests. These tests determine whether you are eligible to receive the full pension, or a part-pension if you earn or own more than the thresholds.

Please talk to us today to ensure you are on track to achieve a comfortable retirement; you deserve it. It is never too early to start planning for retirement.

Tip

Top 3 ways to Stimulate your Superannuation

No matter how young or old you are, there are a few simple ways to help you maximise your superannuation.

1. Maximise your Concessional Contributions

These are the pre-tax contributions, including employer Super Guarantee (SG) and salary sacrificing.

For the year ended 30 June 2026, the concessional contributions cap is $30,000 per year. Concessional contributions are taxed at 15%, which is often lower than your marginal tax rate. This reduces your taxable income and boosts your super savings.

• Tip: Use salary sacrifice arrangements or make personal deductible contributions to reach help you reach the cap.

2. Make Non-Concessional Contributions (NCCs)

NCCs are after-tax contributions, which are not taxed upon entry into your super fund.

For the year ended 30 June 2026, the annual NCC cap is $120,000, or up to $360,000 over three years using the bring-forward rule (if you’re under 75 & if applicable). These contributions grow tax-free in the super environment and can significantly boost your retirement savings.

• Tip: Ideal for those who have received an inheritance, sold an asset, or have surplus cash that they are happy to contribute or save for their retirement.

3. Use the Downsizer Contribution

If you are aged 55 years or older, you can contribute up to $300,000 per person (or $600,000 per couple) from the sale of your home into super. This is not counted towards the NCC cap and can be a powerful way to boost your super balance later in life.

• Tip: The home must have been owned for at least ten years and be your principal residence.

Disclaimer: this information represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs. We can certainly assist with this.