How much super should you have at your age?

Your super balance will most likely play a big part in how comfortably you live in retirement. But depending on how far off retirement is for you, it might be difficult to gauge whether your super is on track, or if you might need to save more for the retirement you want.

In fact, almost half of working Australians don’t know how much they will need to have saved for retirementi.

Retirement stress is increasing

Financial stress ahead of retirement has been creeping up in recent years. More people expect to have a financially difficult retirement, particularly older Australians and people who haven’t set clear goals.

In total, 21% of working Australians are not at all confident they’ll be able to achieve their desired standard of living in retirement – up from 17% in 2020 – and only 9% are very confident, down from 14%. Having a plan if you’re behind on your retirement savings can help ease your stress levelsii.

How does your super stack up?

Find out how your super shapes up against others your age, here’s the average super balance for employed men and women of different age groups across Australia, according to the Association of Superannuation Funds of Australia (ASFA)iii.

Age Average account balance $
Men Women
Under 18 14,170 9,901
18 – 24 8,072 6,994
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 – 49 165,587 112,228
50 – 54 214,795 157,124
55 – 59 286,283 209,653
60 – 64 359,870 289,179
65 – 69 414,380 370,042
70 – 74 464,565 403,268
70 or more 436,370 380,386

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

Women are more likely to have lower super balances than men, which is likely due to taking time off work to raise children.

Reports show 61% of working Australians experiencing financial stress are womeniv.

Women (and single parents) are particularly worried they won’t be able to retire with enough money saved to achieve their desired standard of living in retirement. This lack of confidence is fuelled by the current economic climate in Australia with the rapidly increasing cost of living and inflation.

How much super do you need?

The amount of super you need to live comfortably in retirement depends on a range of factors, such as your expenses, any outstanding debts you might have and whether you have other forms of income like investments, savings, an inheritance, or the government’s age pension, which not everyone will be eligible for.

According to ASFA’s March 2022 figures, individuals and couples around age 67, who own their own home and are looking to retire today would need an annual budget of around $46,494 or $65,445 respectively to fund a comfortable lifestylev.

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 $29,632 or $42,621 respectivelyvi.

Boosting your super balance

If your super balance isn’t as high as you’d like it to be, here are some steps that could help you to increase your retirement savings.

Check out your super details

Your super should be working for you, so review it at least once a year and check things like fund performance (noting, past performance isn’t an indicator of future performance), fees, what insurance you might have inside your super and whether it suits your current needs.

Find your lost super

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.

Consider consolidating funds

There may be advantages to rolling multiple super accounts into one, like fewer fees and less admin but you’ll need to be across the potential tax implications and check if you could lose certain benefits, such as insurance.

Review your investment options

Depending on how far you are from retirement, you might think about switching to a more growth-focused super investment option. Keep in mind however that returns aren’t guaranteed and higher returns are often accompanied by higher risk, so do your research.

Consider voluntary contributions with benefits

Your super should keep ticking over while you’re working with regular super guarantee payments from your employer but you can also make extra contributions to boost your super. Keep in mind there are limits on how much you can put in, depending on the type of contribution you make.

Other things to keep in mind

The value of your investment in super can go up and down. There are general rules around when you can access your super.

Claim a tax deduction on personal contributions.

Under the work test you must have worked at least 40 hours over 30 consecutive days in the financial year or meet the work test exemption. Under the new rules, the work test can be met in any period in the financial year of the contribution. This is different to the previous rules, where the work test must be met before contributing.

Contact us today if you would like to contribute more to your super.

©AWM Services Pty Ltd. First published Jul 2022

i,ii,iv AMP 2022 Financial Wellness report

iii,v,vi Retirement Standard, Association of Superannuation Funds of Australia (ASFA), 2022

 

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