Here's how much super Aussies need in their accounts right now to retire comfortably

Did you know there is a large gap between the amount of super most people have saved up and how much they actually need to retire? Research shows how much you’ll need to comfortably afford occasional travel and recreational activities in retirement.

If you’re feeling out of touch with your super, you’re not alone. In fact, in 2019 the Association of Superannuation Funds of Australia (ASFA) found more than one-third of Aussies didn’t open any emails or letters from their super fund, resulting in 26% having no idea what their balance was and 44% not knowing what insurance they had in super.

Whether you’re 18, approaching your 30s or a few years off from retirement age, it can be important to get familiar with your balance. That’s arguably now more important than ever for those who have accessed their super early to provide financial support after facing a sustained period of unemployment or reduced income due to COVID-19.

ASFA research released in August showed the cost at retirement for a typical 25-year-old woman who accessed $20,000 in early release super could be as much as $85,000 if she was unable to secure employment and contribute superannuation for two years.

Canstar Research has similarly shown considerable long-term costs for accessing super early, with a 25-year-old who had $20,000 in superannuation anticipated to lose up to $102,824 by retirement if they have withdrawn the full amount as part of the scheme.

To help give you a picture of where you stand, here’s an estimate of how much super is needed to retire comfortably, what the gap is between current super balances and what you may actually need, and an analysis of why it’s important to consider your super fund’s investment options and fees now.

 

How much super will I need in my account at retirement?

ASFA estimates the average superannuation balance required to achieve a comfortable retirement would be $640,000 for couples and $545,000 for singles, assuming you withdrew your super as a lump sum and receive a part Age Pension. How much super you need will vary, though, according to the standard of living you want to maintain at retirement.

ASFA defines a comfortable retirement as when a retiree can afford to be involved in a range of recreational activities, buy household goods and pay for top-level private health insurance, a mid-range car, electronic equipment and occasional travel.

How much do I need to have in my super account now to live comfortably after retirement?

Canstar data suggests many Australians could be likely to suffer from a shortfall in superannuation savings when it comes time to retire – if they want to retire comfortably. The research shows that to be on track for this lifestyle, 30-year old men and women would need to have around $61,000 in their super account today, but on average, they are currently between $35,000 and $39,000 short of that balance.

Women currently in their 60s face the biggest super gap of more than $275,000, based on this data.

The below table estimates how much super people of different ages ‘should’ have in their balance today to be able to afford a comfortable retirement, which might allow you to eat out more regularly, travel further and enjoy more luxuries than would be feasible in a more modest retirement.

How much super should you have?

Gender Age Average balance Balance required today for comfortable retirement Gap
Male 30 $25,520 $61,000 $35,480
40 $56,792 $154,000 -$97,208
50 $111,115 $271,000 -$159,885
60 $180,944 $430,000 -$249,056
Female 30 $21,765 $61,000 -$39,235
40 $46,075 $154,000 -$107,925
50 $87,634 $271,000 -$183,366
60 $154,896 $430,000 -$275,104
Prepared by www.canstar.com.au – 10/09/2020. Average balance per APRA’s 2019 Annual Superannuation Bulletin. Balance required today for comfortable retirement based on ASFA’s Super Balance Detective Calculator. Gap calculated as the difference between the average balance and the current balance required for a comfortable retirement. Comfortable retirement assumes ASFA’s Comfortable Standard balance of $545,000 (in today’s dollars) by age 67. ASFA assumes future pre-tax wage income of around $65,000 and that upon retirement the retiree draws down all their capital and receives a part Age Pension.



If you’re comparing Superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for Australians aged 30-39 with a balance of up to $55,000, sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Use Canstar’s superannuation comparison selector to view a wider range of super funds.

Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology that matches the age group specified above.

How do I boost my super account balance so that I can retire comfortably?

If you have found your super balance isn’t on track, Canstar money expert Effie Zahos said there were a few things you could do to bump it up:

  • Check for any lost super. But relatively new rules around superannuation accounts mean some low balance, inactive super accounts will now be automatically merged with active accounts, or the money will be held by the Australian Tax Office.
  • Give your fund a quick health check. That is, make sure you’re in the right investment profile for your needs, check the level of insurance you have, be sure you’re not paying too much in fees and that your fund’s performance is on par with its peers over the long-term (bearing in mind that past performance is not necessarily indicative of future performance). Also, think about other super opportunities you could take advantage of.

How are super funds tracking now to deliver a comfortable retirement?

During the current uncertainty around finances for many Australians due to COVID-19, some people may be feeling nervous about their super balance. ASIC’s Moneysmart website advises consumers that it’s important to consider their long-term goals and make well-informed decisions rather than focusing on market volatility.

The Canstar Research team crunched the numbers on a range of super fund investment options and fees to see how much average balances could grow by the time a person reaches retirement age. Inflation and cost of living increases have been taken into consideration.

The data shows it may be worthwhile weighing up your investment option and fees, because they could make a real difference to your nest egg by retirement.

The super balance projections for those aged 60, which is getting close to retirement age, shows why some Australians may be reliant on receiving additional support via the Age Pension to fund their retirement. Moneysmart advises if you are five years or less from retirement and are concerned about your super balance taking a hit in an uncertain investment market, it’s a good idea to avoid hasty decisions and seek guidance from a licenced financial adviser, your super fund or a Services Australia Financial Information Service officer.

Projected super balance by age and gender

Gender Age Average balance Projected balance at retirement by investment option and fee level
Balanced
and low fees
Balanced
and high fees
High growth
and low fees
High growth
and high fees
Male 30 $25,520 $444,646 $305,292 $494,137 $335,599
40 $56,792 $358,393 $263,297 $389,964 $284,655
50 $111,115 $302,638 $239,407 $322,334 $254,340
60 $180,944 $262,851 $232,069 $271,757 $239,874
Female 30 $21,765 $380,785 $261,621 $423,154 $287,584
40 $46,075 $303,771 $223,656 $330,336 $241,662
50 $87,634 $250,485 $198,703 $266,551 $210,904
60 $154,896 $225,041 $198,724 $232,665 $205,406
Prepared by www.canstar.com.au – 10/09/2020. Based on the average superannuation balance for each gender and age bracket per APRA’s 2019 Annual Superannuation Bulletin. Projected Balance displayed in today’s dollars, and assumes inflation rate of 2.5% p.a. and a cost of living increase of 1.5% p.a. (ASIC MoneySmart Super Calculator). Assumes average adult full-time earnings based on gender (ABS: male $94,224 p.a., female $81,037 p.a.), with the government superannuation guarantee increases of 0.5% p.a. to 12% by July 2025 in line with legislation. Projected balances calculated using ASIC MoneySmart Super Calculator with returns and fee assumptions as follows: Balanced investment scenario assumes 4.91% net investment returns, high growth investment scenario assumes 5.43% net investment returns, low fees scenario assumes $50 admin fees, and high fees scenario assumes 4% contribution fee and 2% indirect cost ratio. Net investment returns based on annualized returns over the past 5 years as of 31/07/2020 for investment options in Canstar’s database. Balanced investment options defined as investment options with growth asset allocation between 60% and 80%. High growth defined as investment options with growth asset allocation greater than 80%. All projected balances assume retirement age 67.

Do Australians rely on the Age Pension?

On average, Australians receive the Age Pension over a longer timeframe than ever before.

When the Age Pension was introduced in Australia in 1909, the nation’s 4.3 million people had an average life expectancy of just 55 years, and few people were expected to reach the Age Pension age of 60 for women or 65 for men.

In 2020, the qualifying Age Pension is age is now 66 for both genders (although it is gradually increasing to 67), while our life expectancy at birth is more than 80 years of age for both men and women, according to the Australian Institute of Health and Welfare.

It’s therefore likely that retirees will rely on their superannuation, and possibly the Age Pension as well, for a number of years, making it all the more important to act now to set yourself up well for a comfortable retirement.

This article was reviewed by our Sub Editor Jacqueline Belesky before it was published as part of our fact-checking process.

Image source: Atstock Productions (Shutterstock)


Ellie McLachlan headshot

Ellie is a Senior Finance Journalist within the Editorial team at Canstar, responsible for leading the news function for the business. She specialises in covering all things home loans and housing, breaking finance industry news and monitoring financial product movements. Ellie has a keen interest in analysing data and research, and is passionate about sharing people’s personal experiences with managing money. Ellie studied a Bachelor of Journalism and Arts (Peace and Conflict Studies) at the University of Queensland and has dipped her toe in digital, broadcast and print media, including at organisations such as The Urban List, The Courier Mail, 4ZZZ and APN News & Media. Follow her on Twitter and LinkedIn, and Canstar on Facebook.

 

Follow Canstar on Facebook and Twitter for regular financial updates.


Thanks for visiting Canstar, Australia’s biggest financial comparison site*

→ Looking to find a better deal? Compare car insurancecar loanshealth insurancecredit cards, life insurance, as well as home loans, with Canstar.

Share this article