HomeFinanceSuperannuationSuper at age 80 – will you have enough?

# Super at age 80 – will you have enough?

Do you know what your superannuation balance is? And do you know how it compares to others in your age bracket? The comparison aspect is perhaps not important to you, although it may give you a sense of whether you have enough super in your account.

Tristan Harrison, from investment adviser site The Motley Fool, has been doing some analysis in this area. He has come up with some interesting numbers across the age groups, particularly in his latest analysis of 80-year-olds.

What makes the super balances of 80-year-olds a topic of interest is that superannuation didn’t exist when they began working. Or, more accurately, compulsory superannuation did not exist. The employers of some now 80-year-olds may have had a pension scheme, but mandatory superannuation was only legislated in 1992.

In the Federal Budget delivered in 1991, Treasurer John Kerin announced mandatory superannuation contributions by employers on behalf of employees. The new system was known as the Superannuation Guarantee (SG), and remains in place today.

Anyone aged 80 today would have been 48 when those mandatory contributions were introduced. So, depending on arrangements their existing employer had in place prior to that, they may have gone decades without super.

## So how much super do today’s 80-year-olds have?

Using Australian Taxation Office (ATO) Taxation statistics for 2020-21, Mr Harrison found 80-year-olds had an average balance of \$475,422. However, he also pointed out that the average can sometimes be misleading, particularly if it differs greatly from the median.

In this case, the variation between the two is significant, with the median superannuation balance for 80-year-olds calculated at \$171,716.

To understand this discrepancy, a couple of mathematical definitions need to be clarified. An average is calculated by adding up a series of figures, then dividing the total by the number of figures.

However, if there’s an ‘outlier’ in that series, the average can create a misleading impression. Here’s a simple example: George has \$20 in cash, Emily has \$10, Paul has \$40, Tom has \$5 and Jennifer has \$1000. Between them the five have a total of \$1075, an average of \$215. A glance at that average could lead to a conclusion that all five have plenty of cash on hand.

But Jennifer’s \$1000 renders such a conclusion as false. By looking at the median – which is simply the midpoint of a series of figures – a clearer picture emerges. In this case, arrange each cash amount in ascending order – \$5, \$10, \$20, \$40, \$1000 – the midpoint is \$20. That provides a more accurate representation of four out of the five people in this group.

Combining knowledge of both average (also known as the ‘mean’) and median, we can confidently conclude at least one in the group has a lot more cash than the others.

## And what does this mean for 80-year-olds?

Let’s get back to Mr Harrison’s figures – an average super balance of \$475,422 and a median balance of \$171,716. The average is almost half a million dollars, but the median tells us that half of 80-year-olds have balances under \$171,816. What’s more, a fair proportion of those with more than \$171,816 will have quite a lot less than \$475,422.

The next logical question is probably, is that enough super? That’s not always an easy question to answer. For singles, the Association of Superannuation Funds of Australia (ASFA) recommends an annual budget of \$50,207 for a ‘‘comfortable lifestyle’. That drops to \$31,867 for ‘modest lifestyle’.

An 80-year-old with an average balance of \$475,422, probably has more than enough. However, for those with a median balance (\$171,716), it may be a struggle.

## What about the balances of Aussies younger than 80?

The figures above provide some indication of where you should be when you reach 80. If you’re significantly younger, now’s a good time to plan to get to that figure. Again, the ASFA guidelines come in handy. For a comfortable retirement, it recommends those currently aged 50-54 should have a balance of \$285,000. Those aged 55-59 should have \$362,000 and those aged 60-64 should have a balance of around \$449,000.

These are, of course, approximate figures. A chat with a registered financial adviser should help you find an estimation relevant to you. And now’s as good a time as any to start planning.

Do you know what your super balance is? And do you know if it’s likely to be enough? Let us know via the comments section below.

Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Andrew Gigaczhttps://www.patreon.com/AndrewGigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.

1. It’s not true that superannuation didn’t exist when 80 year olds started working. According to AMP they have been offering pension superannuation since 1857. In our early thirties, my wife and I couldn’t have been the only people who realised that we would eventually get old and need independent income, because in the early early 1970s a number companies offered similar products.
Many people tell me they’re that that they’re unlucky because the government didn’t organise super for them until later in their working life but if the government needs to tell people that they will eventually get old and unable to work, there is really something wrong.

• They are talking about the Federal Budget delivered in 1991 when Treasurer John Kerin announced mandatory superannuation contributions by employers on behalf of employees.
What you had was voluntary. I had a similar scheme in the mid 70’s and found it was a complete rip off that didn’t even payout what I had contributed on maturity, so after a few years cashed it in.
You were lucky I guess.
Thankfully the Labor party at the time introduce mandatory super. And I’ll also add, that the workers of the day went without or reduced pay increases to supplement the new introduced mandatory super scheme

• Yeah. Thank you for reminding people about this. Most people aren’t even aware that workers gave up a wage increase to start allow the super guarantee to happen. A few people had super before that but not the majority. I am sick and tired of hearing people say it’s a cost to business because it was actually a cost to workers back then.

2. Hi Cosmo, I took out voluntary super in 1976. In 1990 I had less in the account than I had contributed thanks to two factors. Poor economic growth in the mid-eighties and the fees charged by AMP over the 14 year period. I transferred what was left to LUCRF but a tad too late.

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