According to a recent survey by the financial comparison website Finder, Australians may need to save double the amount they currently have in their superannuation accounts to cover their retirement expenses. The survey, which polled 1,063 adults, found that the average amount of savings needed for retirement was $641,223 (US$433,700), while the average balance of a male worker aged 60-64 was around $402,838 and $318,203 for females. This means most Australians are likely to run out of money halfway through retirement.
With the average super balance of $641,223, a retiree would have an annual income of $33,749 based on a retirement age of 64 and the average life expectancy of 83 in Australia. However, this amount falls short of the funds required for a comfortable retired life. According to the Association of Superannuation Funds of Australia, a peak industry body, a budget of $32,417 per year for single retirees and $46,620 for couples is needed to afford a modest lifestyle for people aged 65-84. For a comfortable lifestyle, the budget needs to increase to $50,981 for singles and $71,723 for couples.
Under current laws, Australian employers must pay super to their workers, on top of basic salaries and other benefits. The minimum super rate is 11 percent of employees’ ordinary earnings in the 2023-2024 financial year and will rise to 12 percent by the 2025-2026 financial year.
Graham Cooke, the head of consumer research at Finder, warned that people should not solely rely on the minimum contribution by employers and encouraged Australians to make extra contributions to their super accounts whenever possible.
Personal finance expert Sarah Megginson advised individuals to start making extra repayments to their super accounts as soon as they start their careers, as the savings can significantly grow through compounding. Meanwhile, Cooke emphasized the importance of checking if their super fund could deliver the savings they wanted and shopping around for better deals.