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Retirement

How much super you should have and how you rank against your peers

  • July 05 2021
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Retirement

How much super you should have and how you rank against your peers

By Cameron Micallef
July 05 2021

Soaring houses might mean Aussies need more superannuation than they think, with a superannuation provider revealing steps to lifting retirement savings. 

How much super you should have and how you rank against your peers

How much super you should have and how you rank against your peers

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  • July 05 2021
  • Share

Soaring houses might mean Aussies need more superannuation than they think, with a superannuation provider revealing steps to lifting retirement savings. 

How much super you should have and how you rank against your peers

A study released by the University of NSW showed that soaring house prices could see Australians under the age of 35 priced out of the market.

While younger Aussies might not be able to afford a place to live, the superannuation system is based upon them owning their own home. 

ASFA estimates people who want a comfortable retirement need $640,000 for a couple, and $545,000 for a single person when they leave work, assuming they also receive a partial age pension from the federal government. 

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These figures assume individuals and couples, around age 65, who are looking to retire today would need an annual budget of around $44,412 or $62,828, respectively, to fund a comfortable lifestyle.

To live a modest lifestyle, which is considered better than living on the age pension alone, individuals and couples would need an annual budget of around $28,254 or $40,829, respectively.

However, this figure could increase if Australians do not own their place of residence, with it being assumed that they do. 

Whether single or in a couple, renting retirees are at a distinct financial disadvantage when it comes to retirement.

According to a previous study by the ASFA, a single retiree in Sydney would need about $1,050,000, while a couple would need $1,200,000 at retirement to reach the comfortable standard. 

ASFA modelling showed that single retirees renting outside Sydney slip under the million-dollar mark but are still very high. For example, single retirees renting in Adelaide, Hobart and Perth need around $850,000 to have a comfortable lifestyle.

Where you rank compared with your peers

Before knowing if you have enough superannuation to retire off, members should see how they are stacking up against those at a similar age. 

While the study is only a comparison and does not take into account if the average Australian at each age group is on track to retire with enough superannuation, AMP opines that it provides a snapshot for members to see how they are going.

“If your balance looks a bit low compared to the average for your age group, there could be several reasons for this, including time taken out of the workforce to study, travel or care for older relatives,” AMP stated.

“Alternatively, you may have been out of work, working part-time or earning a wage lower than others your age.”

They also highlight the gap between male and female superannuation and the impending financial outcomes due to this. 

Age

Average balance - men

Average balance - women

20-24

$9,481

$8,051

25-29

$28,319

$23,773

30-34

$58,035

$45,968

35-39

$92,425

$72,098

40-44

$134,992

$98,572

45-49

$182,146

$127,687

50-54

$242,007

$159,188

55-59

$311,163

$207,254

60-64

$371,599

$251,409

65-69

$384,539

$313,050


What to do if you’re falling behind

Those who have fallen behind their peers or will need more than previously thought, or want to lift their retirement nest egg, are being urged to look into how many superannuation funds they have.

While the government’s new stapling measures, starting 1 July 2021, are expected to help individuals with this moving forward, keeping superannuation together will likely result in fewer fees, less admin and lead to overall greater returns.

“If you’ve changed jobs, your name or address over the years, or worked part-time or casual jobs, there’s a chance you may have lost track of some of your super and could be paying multiple fees on different accounts,” AMP said.

Another option for members is to review their superannuation investments to help line up growth with longer-term outcomes.

“Keep in mind, however, that returns aren’t guaranteed and the opportunity for higher returns are often accompanied by higher risk, so do your research before making any decisions,” the fund continued.

AMP also said that members who have fallen behind on their superannuation could look into voluntary contributions to help make up the difference:

Salary sacrifice - This is where you choose to have some of your before-tax income paid into your super by your employer, on top of what they might pay you under the superannuation guarantee. However, it will reduce the taxable liability due to the tax on super being 15 per cent.

Tax deductible contributions - These are voluntary contributions you may choose to make using after-tax dollars (such as when you transfer funds from your bank account into your super), which you then claim a tax deduction for. 

Co-contributions - If you’re a low to middle-income earner and have made an after-tax contribution to your super fund, which you don’t claim a tax deduction for, you might be eligible for a government co-contribution of up to $500.

Spouse contributions - If you’re earning more than your partner and would like to top up their retirement savings, or vice versa, you may be able to claim an 18 per cent tax offset on up to $3,000 through your tax return.

Downsizer contributions - If you’re 65 or over and eligible, you may be able to make an after-tax downsizer contribution to your super of up to $300,000, using the proceeds from the sale of a qualifying property, regardless of your work status, super balance, or restrictions that otherwise apply. This law is expected to also help those under 60 starting 1 July 2022.

How much super you should have and how you rank against your peers
How much super you should have and how you rank against your peers
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About the author

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Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

author image
Cameron Micallef

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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