Ready to retire sooner? Here’s how much you really need in your super

As we navigate through our working years, the dream of retirement often feels like a distant horizon. But for many Australians, that horizon might be closer than they think. With the latest figures on superannuation savings, it’s time to take a closer look at what it really takes to retire comfortably in Australia.

The concept of a ‘comfortable retirement’ can be subjective, but financial experts have crunched the numbers to give us a clearer picture. According to new data from Super Consumers Australia, retirees now require approximately 10 to 15 per cent more in their superannuation than they did last year, particularly for those with medium to high spending needs. This increase is largely due to the rising cost of living, which has become a pressing concern for many.

From salary sacrificing to knowing the magic numbers—unlock the keys to a smoother, earlier retirement. Credit: Super Consumers Australia

However, there’s a silver lining. Super balances have seen an average growth of about 13 per cent over the same period, which has helped to offset most of the cost increases. This growth is a testament to the resilience of the superannuation system and the benefits of long-term investment strategies.

Xavier O’Halloran, CEO of Super Consumers, offers a glimmer of hope, suggesting that people might be ‘closer than they think’ to their retirement savings goals. The organisation has developed retirement targets that serve as a ‘rule of thumb’ for Aussies, particularly those who own their own home. These targets are based on actual retiree spending patterns and are designed to help Australians gauge their readiness for retirement.

So, what are the magic numbers? For a single retiree, the target super balance is around $310,000, while couples should aim for approximately $420,000. When combined with the Age Pension, these amounts can provide an annual income of $43,000 for singles and $62,000 for couples until the age of 90.

It’s important to note that these figures assume retirees will own their own homes and will access the Age Pension at some point during their retirement. The current Age Pension rates are $1,144.40 per fortnight for singles and $1,725.20 per fortnight for couples. Homeownership is a significant factor, as it eliminates the cost of rent or mortgage payments, which can be substantial in retirement.

For those with aspirations of a ‘high’ retirement standard, singles would need to save $876,000 in super by the age of 65, allowing them to spend $59,000 a year. Couples would need $1,223,000 to enjoy an annual expenditure of $87,000.

Interestingly, Super Consumers Australia’s research indicates that about 30 per cent of retirees spend at the ‘low’ level or less, 50 per cent spend at the ‘medium’ level or less, and 70 per cent spend at the ‘high’ level or less. This suggests that many retirees are living within their means and may not require as much as they initially thought to maintain a comfortable lifestyle.

For those in the pre-retirement age bracket of 55, aiming for a ‘medium’ standard would require singles to have $395,000 saved by 65, while couples would need $548,000. For a ‘high’ standard, the targets rise to $846,000 for singles and $1,117,000 for couples.

It’s also worth considering other retirement standards, such as the one from the Association of Superannuation Funds of Australia (ASFA), which suggests slightly higher amounts for a ‘comfortable’ retirement.

If you’re still in the workforce and looking to boost your superannuation, one strategy to consider is making extra contributions. The Super Members Council found that a 30-year-old on an average income who starts salary sacrificing $20 a week could end up with $67,000 more at retirement, along with immediate tax savings.

Julian Mauro, an accountant and CEO, explains that salary sacrificing is a smart move that leverages the power of compound interest and can lead to significant tax savings. Contributions to your super fund are taxed at a flat rate of 15 per cent, which is considerably lower than personal marginal tax rates that can be as high as 47 per cent, including Medicare.

In essence, the more you earn, the more you stand to benefit from salary sacrificing due to the tax differential. It’s a simple yet effective way to enhance your retirement savings and reduce your tax bill simultaneously.

As we wrap up, it’s important to reflect on your own retirement plans. Have you checked your superannuation balance recently or considered strategies to boost your savings? We’d love to hear your thoughts and experiences—share them in the comments below and let’s keep the conversation going.

Also read: Will your retirement savings last?

Abegail Abrugar
Abegail Abrugar
Abby is a dedicated writer with a passion for coaching, personal development, and empowering individuals to reach their full potential. With a strong background in leadership, she provides practical insights designed to inspire growth and positive change in others.

4 COMMENTS

  1. “Interestingly, Super Consumers Australia’s research indicates that about 30 per cent of retirees spend at the ‘low’ level or less, 50 per cent spend at the ‘medium’ level or less, and 70 per cent spend at the ‘high’ level or less.”

    150% all up???

  2. Alas, these figures evaporate in the vicious new Aged “Care” system the government has just introduced. It’s imperative that retirement advisors tell us about it.

    If retirees suffer a catastrophe such as dementia, a massive stroke, or a bad fall, they fall into the clutches of nursing home corporations.
    Aged care residence Providers require payment of a bond (RAD) of typically $1 million, sometimes $2 million. But the mean super balance for over 65yos and over is around $200,000, Less for women. The average is $400,000.

    So most will not even have close to the RAD, and will have to pay 8.43% annual interest on the money they don’t have (Daily Accommodation Payment = DAP). So typically $84,300 plus the many other complicated fees and charges that inmates are hit with.
    That $200,000 super balance won’t last long until the inmate is stony broke, in which case they will perhaps be kicked out or sent far away to somewhere cheaper.

    Advisors please note: the “Lifetime Cap” we’re told about does NOT include the DAP, which must be paid until the inmate’s money runs out.

    Those who own an unmortgaged home can of course sell their home to pay the RAD, which regrettably will leave the other spouse homeless. If both spouses must go in, they must pay two RADs, which the house sale may not cover in any event.

    Repeatedly surveys tell us that our worst fear is our money running out before we dies. This new Aged Care Act horrorshow guarantees that grim outcome.
    Fortunately some are aware of this and are fighting for reform.

    • Thanks for letting everyone know about this. It is something to keep in mind as we all age. This is one reason I joined this newsletter, but it seems to be alot of drivel not actual information we require.

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