How Much Super Do I Need To Retire?

Most of us are preoccupied with our current financial goals and needs — it’s only when we approach retirement that we start to focus on our superannuation. Close to three in five (56%) people are concerned about being able to maintain their lifestyle in 10 years’ time, especially people aged 50–70 who are more likely to be retired or preparing for retirement in that time.

No matter your age, super is an important element of your financial health. Super relies on compounding returns to grow — the sooner superannuation becomes your focus, the healthier the balance will look when you retire. 

If you’re wondering “how much super do I need to retire”, it’s important to remember that there’s no one-size-fits-all figure you need to reach. The figure is as personal as how you like vegemite on your toast. 

We often receive FAQs from our clients on this topic e.g. “how much super do I need to retire”, “how much super should I have at my age” and many more. In this article, we answer some of these questions and share some tips on how to determine how much super you really need to retire. 

How much super should I have at my age?

Image: Pexels

Whether you’re starting your very first job or heading towards retirement, you should have a solid understanding of how your superannuation is tracking. Knowing how much super you have now means you can plan ahead for retirement and grow super enough to live comfortably in future. 

There’s no hard and fast answer to “how much super should I have at 50” or any age for that matter. However, the average superannuation per age group and gender are listed below (the latest statistics from 2020).

Age	Men ($)	Women ($)
18-24	$11,600	$10,100
25-34	$53,100	$40,200
35-44	$132,500	$88,800
45-49	$198,800	$126,900
50-54	$247,300	$152,700
55-60	$293,000	$192,000
61-65	$318,500	$260,900

You will notice that there is a stark difference between the balance of 61-65-year-olds and what the Association of Superannuation Funds of Australia (ASFA) recommends for a ‘comfortable lifestyle’, $545,000 for singles and $640,000 for a couple (shown in the below table). This indicates that Australians need to be doing more to grow their superannuation. Many Australians would be able to achieve a ‘modest lifestyle’ (retiring with $70,000 in savings), which is deemed marginally better than the age pension. The modest lifestyle is achieved by utilising a hybrid strategy of the age pension and retirement savings. However, is a modest lifestyle the lifestyle you want to live in retirement?

Savings required for retirement at age 67

Age	Couple	Single
Comfortable lifestyle	$640,000	$545,000
Modest lifestyle	$70,000	$70,000

ASFA Retirement Standard

How much does a couple need to retire?

Image: Pexels

Now that we know how much super you should have, let’s consider how much a couple needs to retire. Despite the rumours circulating around super, you don’t need a million dollars to retire. While it would certainly be nice to have that amount of money, this isn’t achievable for many Australians.

Again, there’s no “one size fits all” regarding superannuation for couples, but the Association of Superannuation Funds of Australia (ASFA) has provided some insight into the average living costs for both couples and singles so you can get a general idea. These are the average living costs for retirees (65 and older who own their own home) as of March 2022.

ASFA Retirement Standard	Annual Living Costs	Weekly Living Costs
Couple (Modest*)	$42,621	$819
Couple (Comfortable**)	$65,445	$1,258
Single (Modest)	$29,632	$569
Single (Comfortable)	$46,494	$894

* Modest — An estimate of how much is needed for the basics.

** Comfortable — An estimate of how much money is needed to be involved in leisure activities and have a good standard of living e.g. private health insurance, a reasonable car, household goods and holidays. 

Some believe a rule of thumb for estimating your retirement income needs is to assume you need two-thirds (67%) of your pre-retirement income to maintain the same standard of living in retirement. However, this is a limited view. Do you still have a mortgage? Will your utility bills and food bills drop by 33% when you are home more? Most likely not. What is more important to look at is your actual costs and whether they will continue into retirement or not.

How to determine how much super you need to retire

Image: Pexels

To understand how much super you need to retire, it’s important to look into your individual circumstances and lifestyle goals. Below, we’ve highlighted a few considerations to help determine how much superannuation you really need to retire. 

Your lifestyle

When you think about retirement, what does it look like? Do you want to take the trip of a lifetime overseas or travel around Australia? Or do you want to help your own kids with their financial situation? 

Think about our aforementioned “modest” and “comfortable” lifestyles. Do you want enough for the basics, or do you want to live life to the fullest with all sorts of leisure activities and luxuries? For some perspective, here’s an outline from ASFA for “comfortable” living in retirement. 

Image: ASFA

Your mortgage

One major consideration is the question of whether you have paid off your mortgage or not. Depending on how much you owe at the time of retirement, mortgage repayments will deplete your retirement savings considerably, affecting the quality of retirement you may have. 

Starting early

When it comes to super contributions, the power of compounding returns cannot be underestimated. Robin Bowerman from Vanguard describes compounding as earning investment returns on past returns and your original funds. 

Simply put, the earlier you start to make super contributions, the better. 

The more super that is added at an earlier age, the longer those funds have to grow. Regularly investing may keep your investment growing and speed up the compounding benefits. Shrewd investors are also undeterred by market volatility, staying the course as earnings are reinvested in their super. 

Returns added to these contributions over time have the potential to leave you with a balance that could set you up for the lifestyle you want to live in retirement. While it might seem like an unattainable figure, an interesting exercise is to see how much you would need to put away to achieve $2 million at retirement — check out our “How Much Do I Need to Retire” Calculator.

Soon, you’ll see the earlier you start putting more money away, the closer you’ll get to achieving your superannuation goals. A little (with compound returns over time) can add up to a lot. 

Talk to a professional about how much super you need to retire

When it comes to long-term goals and big investments like superannuation, the value of good advice can’t be ignored. It’s a good idea to speak to a financial planner specialising in superannuation and retirement planning. Having your superannuation looked after and regularly reviewed by a professional can allow you to relax, knowing your retirement strategy is well underway. 

Elliot Watson Financial Planning can help you achieve more with your super so that when the time comes, you can experience the freedom to live out retirement in your own individual way. 

For expert financial advice from an award-winning team, get in contact with Elliot Watson Financial Planning at 02 4038 1623

This information, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without considering your individual objectives, financial solutions or needs. 

Before acting on this information, you should consider its appropriateness regarding your objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.

The views expressed in this publication are solely those of the author; they are not reflective or indicative of the licensee’s position and are not to be attributed to the licensee. They cannot be reproduced in any form without the author’s express written consent.

Elliot Watson Financial Planning Pty Ltd is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

Feature Image: Pexels