Fresh analysis suggests many average-income Australians are already on track for a comfortable retirement – but experts are divided on how much is really enough.
For the first time, the Association of Superannuation Funds of Australia (ASFA) projects that a 30-year-old earning the median wage of $75,000 is now on track to retire comfortably, thanks to July’s increase in the superannuation guarantee to 12 per cent.
According to ASFA’s projections, a 30-year-old with a current super balance of $30,000 and a steady median income until retirement at age 67 would retire with about $610,000 in superannuation.
That’s more than the $595,000 the organisation says is needed for a single homeowner to retire comfortably.
ASFA CEO Mary Delahunty called it a ‘major milestone’ in the evolution of Australia’s retirement system.
‘With the super guarantee increase to 12 per cent, we are seeing super fulfill its objective of providing a dignified retirement for ordinary Australians, with today’s 30-year-olds reaping the rewards of decades of progress in our world-class super system.’
According to ASFA Australians need $690,000 in super savings for a couple, or $595,000 for a single person, by age 67 to enjoy a comfortable retirement.
These estimates are based on the assumption that you own your home outright, receive a part Age Pension, and achieve an average annual investment return of 6 per cent.
How much super you should have for your age according to the AFSA
AGE
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
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46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
SUPER BALANCE
$5,500
$11,000
$18,500
$26,000
$34,000
$41,500
$50,000
$59,000
$66,500
$74,000
$83,000
$93,000
$101,500
$111,500
$122,500
$133,000
$144,000
$156,000
$168,000
$179,000
$190,000
$201,000
$213,000
$226,000
$239,000
$252,000
$266,000
$281,000
$296,000
$311,000
$328,000
$344,000
$361,000
$377,000
$393,000
$415,000
$431,000
$453,000
$469,000
$490,000
$509,000
$531,000
$549,000
$571,000
$584,000
ATO data shows the average super balance by gender and per age cohort
But many Australians are falling short of that target. For those aged 60 to 64, the average super balance is around $395,000 for men and $315,000 for women. The median balances are significantly lower – $220,000 for men and just $163,000 for women.
The average can be skewed upward by a small number of people with very large super balances, while the median gives a better sense of what a typical person has.
But bestselling finance author Scott Pape said Australians could retire comfortably with far less than ASFA’s recommended amounts, which he argued were unrealistic for most people.
‘If you own your own home, get the aged pension, and you’re willing to do a bit of paid work, you could comfortably retire on as little as $250,000,’ he said on his Barefoot Investor website.
‘The people who calculate the ASFA figure are … the super fund lobby. It’s a bit like asking old Dr Kellogg, ‘What’s the most important meal of the day?’ (Breakfast, of course!)’
Pape pointed to alternative estimates he believes are more practical, citing research by Super Consumers Australia and the Australian Bureau of Statistics.
‘A group called Super Consumers Australia (a partner of CHOICE) has done the research and come up with their own figures. Not only are their figures much more attainable, they’re based on ABS research on what Aussie retirees spend.’
According to Super Consumers Australia, a single homeowner needs about $310,000 in super, while a couple needs around $420,000 at retirement to maintain their current lifestyle.
ASFA CEO Mary Delahunty. According to ASFA Australians need $690,000 in super savings for a couple, or $595,000 for a single person, by age 67 to enjoy a comfortable retirement.
But Barefoot Investor Scott Pape says Aussies will need much lesss
‘Our retirement targets provide home-owning Australians with a “rule of thumb” for what is needed to maintain living standards in retirement, based on actual retiree spending,’ said Xavier O’Halloran, CEO of Super Consumers Australia.
‘Our targets show a typical single needs around $310,000 in super, and a couple needs around $420,000 in super, when they retire to maintain their living standards through their retirement.
‘Combined with income from the Age Pension, homeowners with this amount of super can reliably provide an annual amount of $43,000 and $62,000 until age 90.’
‘Most people will access the Age Pension at some point in retirement. When combined with earnings from super, over the long-term the retirement system is designed to provide significant protection against cost of living increases.’
