Experts have revealed exactly how much pension you need in your savings and at what age to retire comfortably.
They say a couple will need $640,000 in super savings when they retire, while singles need $545,000, assuming they use up all their retirement fund and receive a partial retirement pension.
The figures are based on a couple or single person who does not have to pay a mortgage or rent.
A comfortable life is defined as a life that allows a healthy retiree to enjoy leisure activities, purchase household items, private health insurance, a reasonable car, proper clothing, electronic equipment, and travel.
So, how do you know if you’re on the right track?
According to the Australian body for the highest pensions, a 25-year-old average worker needs just $17,000 in his Super today to reach $545,000 at age 67.
A 35-year-old would need $93,000, a 45-year-old would need $195,000, a 55-year-old would need $330,000, and a 65-year-old — two years from retirement age — would need $503,000.
Camera icon Couples need $640,000 in super savings when they retire, while singles need $545,000. iStock Credit: Included
The Association of Superannuation Funds of Australia (ASFA) calculation assumes a future pre-tax wage of under $65,000 per year.
ASFA deputy CEO Glen McCrea said the goal was to reach as many people as possible in what ASFA calls a comfortable standard. Still, at the moment, only a fifth of working-age Australians have reached that level.
“A comfortable stand means you can go to the pub and have a meal, you can drink that cup of coffee, when you reach retirement age you can buy a present for your grandchildren, you can get your car fixed,” said Mr. McCrea. †
“To get there, for a couple, you’re looking at a balance of about $640,000 or a single $545,000.
“The reality is that about 20 percent of people get there.”
The shortfall may be due to the failure of some to contribute large amounts of Super during their working lives, he said.
But with increases in the pension guarantee employers are required by law to make to employees, the gap would narrow, Mr. McCrea said.
Camera IconAussies are advised to review their super balance regularly to ensure they are on track. Credit: Included
As of July 2021, regular mandatory contributions paid by employers to their employees’ accounts rose from 9.5 percent to 10 percent of their wages, affecting about eight million, mostly private sector workers.
This would rise to 10.5 percent on July 1 and 12 percent in 2025-26, in line with current legislation.
“We estimate that by going to 12 percent in a few years, you’ll get 50 percent of the population there by 2050 (to the comfortable standard),” said Mr. McCrea.
“There is hope, and super is a long-term prospect, so there is real hope for people who get the higher super balance to gain more dignity in retirement as they get older.”
Mr. McCrea said many people withdrew from subduing the pandemic ers to meet financial challenges but hadn’t replenished the money when they could.
And with the rising cost of living, people may feel that now is not a good time to pay extra to secure their nest egg.
Camera icon Put extra money into Super if you can boost your nest egg. Credit: News Regional Media
“Things are tough right now, but if you maybe got that extra paycheck or that little bonus or worked a few extra shifts, see if you can put it back into super because every dollar counts when you’re on your way.” to your retirement,” he said.
“The good thing about a pension is that it’s mandatory, and you often don’t notice it’s going into it, and then, over many years, it builds up slowly, and you get a good balance.
“When things are tough, like now, people may not be able to contribute because the cost of living is through the roof.
“But let’s assume the economy is looking better in five or ten years; inflation is under control; that could be a good time, if you’re a little behind, to try and catch up.
“So keep talking to your Super, look at your balance, talk to your fund, and look for those opportunities to contribute when you can.
“Be familiar with it and try to understand: ‘Am I on the right track’?
“If people contribute 12 percent for most of their lives, they should be comfortable.”
NED-6345 How much Super do I need?
