Why one in five will struggle to retire and the super balance you should have right now for a comfortable retirement

One in five Aussies will struggle to retire based on the amount of super in their savings right now. Here is where you should be at.

One in five working Aussies are pooling enough funds now to reach a comfortable retirement, experts say.

A couple needs $640,000 in super savings at retirement, while singles need $545,000, in order to achieve a “comfortable” lifestyle.

However, most working age people are not on track to reach that level.

“The reality at the moment is about 20 per cent of people get there,” Association of Superannuation Funds of Australia deputy CEO Glen McCrea said.

The ASFA calculation to reach what it terms a comfortable standard assumes a future pre-tax wage income of just under $65,000 a year and that a couple or single person has no mortgage or rent to pay for.

The figure also assumes they use up all their retirement fund and receive a part age pension.

A couple needs $640,000 in super savings at retirement, while singles need $545,000. Picture: iStock

Mr McCrea said the goal was to ensure as many people as possible reached the comfortable standard, which would allow a healthy retiree to enjoy leisure activities, buy household goods, private health insurance, a reasonable car, good clothes, electronic equipment and travel.

“A comfortable standard means you can go to the pub and have a meal, you can have that cup of coffee, when you’re at retirement age you can buy your grandkids a present, you can get your car fixed,” he said.

To know if you’re on the right track, a 25-year-old average worker would need only $17,000 in their super today to reach $545,000 by age 67.

A 35-year-old requires $93,000, a 45-year-old should be at $195,000, a 55-year-old should have $330,000 and a 65-year-old — two years from pension age — would require $503,000.

Mr McCrea said any shortfall could stem from a failure by some to contribute high amounts to super during their working life.

But with increases to superannuation guarantee payments employers must make to workers under law, the gap would reduce, he added.

Aussies are advised to assess their super balance regularly to ensure they’re on track.

From July 2021, the regular compulsory contributions employers made to their employees’ account, rose from 9.5 per cent to 10 per cent of their wage, affecting about eight million mainly private sector workers.

This would increase to 10.5 per cent on July 1 and reach 12 per cent in 2025-26, in line with current law.

“We estimate by going to 12 per cent in a couple of years’ time, by 2050 you get 50 per cent of the population there (to the comfortable standard),” Mr McCrea said.

“Super is a long term prospect, so there really is hope for people getting higher super balances to get more dignity in retirement as they get older.”

Mr McCrea said during the pandemic, many people withdrew from their super to deal with financial challenges but had not replenished the funds when they could.

And with the rising cost of living, people may feel now was not a good time to make extra payments to secure their nest egg.

Chipping extra money into super when you can helps boost your nest egg, experts say.

“Things are tough at the moment, but when you may have that extra pay cheque or that little bonus or been working a few extra shifts, see if you can chip it back into super because every dollar certainly counts as you head towards retirement,” he said.

“The good thing about superannuation is it is compulsory and often you don’t notice it’s going in there and then over many years, it slowly compounds away and gives you a good balance.

“Obviously when things are tough, like now, there may not be the capacity for people to contribute, because the cost of living is going through the roof.

“However, in five or ten years’ time, let’s assume the economy’s looking better, inflation is under control, that could be a good time, where if you’re behind a little bit, to try and catch up.

“So keep engaging with your super, look at your balance, talk to your fund and look for those opportunities to contribute when you can.

“Get familiar with it and try to understand, ‘Am I on track’?

“If people are contributing 12 per cent for most of their life, they should get to a comfortable level.”