ATO data reveals big shortfall in average super balances

The super balance of the average Australian is less than you’d expect, the Australian Taxation Office (ATO) has revealed.

The Association of Superannuation Funds of Australia (AFSA) says you need about $535,000 in super at age 67 to have a comfortable retirement.

To achieve this, AFSA says you should have saved $164,000 in super by age 40.

But the latest figures from the ATO show the average Australian has a typical balance of $145,388 – well below the AFSA number. And that figure is skewed by the extremely large super funds held by a handful of individuals, the ABC reports.

Read: Super still outperforming most asset types

In fact, the data shows only high-income earners on $180,000 per year or more have a realistic chance of meeting the AFSA target.

Those on low or middle incomes (up to $37,000 and between $37,000 and $90,000) have little chance of meeting the target by age 67, holding average balances of $92,490 and $116,698 respectively.

The median balance of $49,374 across all incomes was also concerning, with men holding an average of $56,425 and women $44,634.

The data has again sparked debate about how much is needed for a comfortable retirement.

Read: Just three super funds turn a profit last financial year

Investment expert Scott Pape, better known as the Barefoot Investor, says AFSA’s numbers are unrealistic and based on an individual spending $46,494 a year in retirement.

“For far too long, the super industry has played to the millionaires in the members’ stand,” he told Daily Mail Australia.

Instead, he recommends following the advice of Super Consumers Australia (SCA), which believes $258,000 in super at age 67 is sufficient for a retiree without a mortgage.

Read: Industry expert floats plan to increase preservation age

“These savings targets are based on what people spend in retirement with a buffer built in to provide confidence that people’s savings can weather the type of market volatility we’re currently experiencing,” says Xavier O’Halloran, SCA director.

“Having credible targets, based on actual spending, means people can confidently spend and get on with enjoying their retirement.”

However, the latest YourLifeChoices Retirement Affordability Index shows what’s needed in retirement may actually be closer to the AFSA figure.

The index shows expected annual expenditure for four retirement cohorts: $81,435 for a couple desiring a ‘well-off’ lifestyle and $46,522 for singles, and $47,096 for a ‘constrained’ lifestyle for couples and $25,963 for singles.

This mirrors AFSA’s estimation almost perfectly, suggesting SCA and Mr Pape may be underestimating the amount people spend in retirement.

How much do you think is adequate for retirement? How much would you estimate you spend annually? Let us know in the comments section below.

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Brad Lockyer
Brad Lockyer
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.
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