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Most super balances below what's needed for retirement: APRA

elderly couple going over bills at kitchen table

Data from the Australian Prudential Regulation Authority (APRA) has shown that most superannuation balances are far below what’s needed for a comfortable retirement.

Despite total superannuation assets in Australia now topping $3.3 trillion, the majority of individual account holders do not have enough to maintain their current quality of life in retirement.

The latest APRA Annual Superannuation Bulletin (ASR) for the 2020/21 financial year shows the average super account balance sits at a healthy $135,000 which is a 17 per cent increase on the year before.

But this figure is skewed heavily by wealthy account holders and hides the real truth.

Read: Advocacy group calls for cap on superannuation balances

Narrowing it down to just those aged over 55, or those approaching retirement age, makes things look a bit more dire.

In this age bracket, the average account balance is $222,318 for men and $174,688 for women, which represents a 22 per cent gap between genders.

Averages can be skewed by higher earners. A 2019 report by the Association of Superannuation Funds of Australia (AFSA) found that Australians aged between 60 and 64 are retiring with a median balance of $154,452 for men, and $122,848 for women.

But according to AFSA, to maintain a comfortable lifestyle in retirement a single person will need $545,000 in savings and couples will need $640,000.

Read: Understanding your true future living costs

AFSA measures this standard four times a year to take into account the rising prices of food and utility bills, health, communication, clothing, travel and household goods.

The YourLifeChoices Retirement Affordability Index shows that a well-off couple (self-funded retirees) should budget to spend $78,833 a year and constrained couples (homeowners on a part Age Pension) $45,495. Annual costs for cash-strapped couples (renters on an Age Pension) were $38,184.

Well-off singles would spend $45,009, constrained singles $25,069 and cash-strapped singles $23,994.

While individuals who are part of a couple may be able to retire safely with $640,000, the situation for singles is more perilous.

Kirby Rappell, executive director of SuperRatings told The New Daily he believes these figures are not quite as alarming as they appear.

“There are a large number of people who retire and then cash out their super,” Mr Rappell says.

“They might buy a car or go for a trip and that skews down the account balance for people in their late 50s and early 60s,” he explained.

Read: Reasons to return to work after retirement

But on the other side, many lump sum withdrawals by people in their late 50s and early 60s are used to pay off a house or cover living costs after becoming unemployed.

Surprisingly, the negative numbers don’t match the attitudes towards retirement.

According to Investment Trends’ 2021 Retirement Income Report, the majority of Australian pre-retirees still believe they have enough to be comfortable.

“For the first time in five years, one in two retirees expects their retirement savings will outlast their years in retirement,” says Investment Trends’ Kurt Mayell.

The report found that optimism among those preparing to retire has grown, with 16 per cent claiming to be ‘well prepared’ while 45 per cent described themselves as ‘somewhat prepared’.

The YourLifeChoices Older Australians Insights 2021 survey found that 43 per cent of 7155 respondents believe their savings will provide an income for life.

Do you feel you have enough superannuation for retirement? Is the amount in your super similar to what APRA found? Let us know in the comments section below.

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