Do you have enough super to retire? You may need less than you think

The amount that Australians think they need in superannuation for a comfortable retirement has jumped by nearly 20 per cent in two years – but most people tend to overestimate how much they need.

After restrictions imposed during COVID-19 lockdowns, people emerged with a greater interest in retirement planning and higher expectations for their nest egg. Australians expect to have 19 per cent more in their super balances when they retire – $940,509, up from $791,796 in 2022 – according to an Australian Retirement Trust survey.

Anne Fuchs says the increased expectations for retirement savings can be attributed to the return of normalcy after the COVID-19 pandemic.

ART advocacy and impact executive general manager Anne Fuchs said people’s expectations about their future lifestyles changed after the COVID-19 pandemic.

“People get to a point where their kids are done with school so you have more capacity to think about, ‘10 years from now, what would I like? Would I like to stop work? And what would be that number [superannuation targets] if I did want to stop work?’.”

Fuchs described it as a common phenomenon, in which more people want to retire earlier to enjoy retiree life.

“More people want to retire earlier and dial back their hours at 60 to do all these big trips, holidays or dreams that they might have ... I think COVID-19 helped us realise what’s important, and so there seems to be a strong desire to go out and live life.”

Australians think they’ll need 20 per cent more in their super to retire comfortably.Credit: Oscar Colman

Similarly, inflation and cost-of-living pressures have driven retirees’ superannuation savings targets up by 10 to 15 per cent compared to last year, according to estimates from Super Consumers Australia.

However, those with their super in a typical balanced fund would have seen balances grow by 13 per cent in the same period, largely offsetting the inflated targets. Retirees can also expect to have lower-than-expected super balances due to the government age pension, which almost two-thirds of Australians 65 years and over receive.

SCA chief executive Xavier O’Halloran said: “When the age pension is combined with earnings from super over the long term, the retirement system is designed to provide significant protection against cost-of-living increases.”

A typical single person needs around $310,000, and a couple $420,000 when they retire to maintain living standards, based on the Australian Bureau of Statistics’ household expenditure survey data for retirees.

“Superannuation is only part of the equation; the age pension does a lot of heavy lifting,” SCA deputy director Katrina Ellis said. “Singles might not be fully on track, but couples should be quite comfortable that they’re well on track with the evidence that we’ve seen.”

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