How much superannuation you should have based on your age

Working out what superannuation balance you should have now – based on your current age – only takes a minute.

Australia’s cost-of-living crisis threatens to dent the nest eggs of Australians who shift money away from superannuation contributions to pay for more immediate pressures.

Inflation is climbing by 8 per cent, mortgage repayments are up 40 per cent and grocery prices have risen close to 20 per cent, meaning super strategies such as voluntary contributions and spouse contributions will compete for scarce spare household dollars.

New data from superannuation regulator APRA shows personal super contributions climbed 17 per cent in the year to September 30 to $36.6 billion, while total contribution rose 12 per cent to $150 billion – helped by increases in compulsory employer payments.

MBA Financial Strategists director Darren James says surging living costs will test households’ discretionary spending in 2023, and some people “still have their heads in the sand and will get hit”.

He says automatic salary sacrifice is unlikely to change, but people who make other voluntary super deposits including spouse contributions, co-contributions and one-off annual payments may find they won’t have the money in June 2023 to do it.

“This isn’t a forever problem – this is a now problem,” he says.

James says online calculators can help people project nest egg sizes, but do not reflect their lifestyle preferences and desires, where they live, employment income and goals.

“You still need to see someone to have those discussions,” he says.

Calculators can show the powerful benefits of compound interest. “Small contributions over a long time are the key, rather than trying to go bang and catch up,” James says.

The Association of Superannuation Funds of Australia’s super balance detective tool on its superguru.com.au website allows people to punch in their year of birth to instantly get a figure showing what their super balance should be today. It is based on someone reaching $545,000 by age 67, which is what ASFA’s long-running retirement standard says is necessary to live comfortably on a combination of superannuation and age pension payments.

Compound interest helps grow superannuation savings for a comfortable retirement.

ASFA CEO Martin Fahy says compound interest delivers “significant long-term benefits” to people who make additional contributions to super.

Australia has recent history of impacting super balances, with the Covid-19 early release scheme in 2020 resulting in people withdrawing $37 billion from their funds in two $10,000 tranches. This is projected to cost a 30-year-old up to $43,000 by retirement and a 40-year-old up to $35,000.

“Nearly one million Australians, mostly young people, women, single parents and the unemployed, closed or cleaned out their super account as a result of Covid early release payments, which unfortunately comes at a significant long-term cost to their retirement balances,” Fahy says.

“Engaging with and closely tracking your superannuation balance is a key part of retirement planning.”