When it comes to money, it’s easy to let loose your competitive side. So often, we compare ourselves to other people to see how we stack up. Do you earn more than your neighbour? Is your sister’s investment portfolio getting better returns than yours?
First and foremost, you should always know that saving is not a competition. Whatever goals you have along the way, saving should be a journey towards financial security for you. So how can you see how far along you are on that journey?
Let’s have a look at some positive comparisons – superannuation benchmarks you can use to track your progress.
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The amount of money you’ll want to have saved up in your super depends on the kind of lifestyle you intend to have in your retirement. The research bodies who investigate this can come up with a number, and we share some below, but they are all based on a number of assumptions and will not take your personal situation, goals and aspirations into account. They each come at it from a different perspective, and clearly what is most important to you is YOUR perspective. This is what working with a financial planner can help you to understand more clearly.
Assuming you are relatively healthy and own your home outright, ASFA have set some benchmarks for retirement needs.
As a single person enjoying a comfortable lifestyle, you’ll need to have access to roughly $44,4122 per year from the age of 65, the Association of Superannuation Funds of Australia (ASFA) claims.
Based on this research from ASFA, that translates to a balance of $640,000 for couples at age 65 years or $545,000 for a single person.
Meanwhile, men and women aged 65 in 2016-2018 were estimated by the Australian Institute of Health and Welfare (AIHW) to live another 19.9 and 22.6 years respectively. 2
According to this research by AIHW, men wanting a comfortable retirement should expect to need around $883,798.80 and women wanting the same may need as much as 1,003,711.2.
With AIHW reporting that life expectancies are increasing, the required super is only set to rise too. Find out about super and pension changes in 2021.
Unfortunately, based on both reports, the average superannuation balance of men and women approaching retirement age is considerably lower than this. The mean balances of Australians by age are as follows:
|Age||Average balance for men||Average balance for women|
|20 – 24||$9,481||$8,051|
|25 – 29||$28,319||$23,773|
|30 – 34||$58,035||$45,968|
|35 – 39||$92,425||$72,098|
|40 – 44||$134,992||$98,572|
|45 – 49||$182,146||$127,687|
|50 – 54||$242,007||$159,188|
|55 – 59||$311,163||$207,254|
|60 – 64||$371,599||$251,409|
|65 – 69||$284,539||$313,050|
Source: AMP, Average super balances for employed Australian men and women of different ages (excluding those with no super)
At this rate, many Australians near their retirement may need to rely on the pension in their golden years and could struggle to enjoy their desired lifestyle. Currently, the maximum basic rate a single person of the age pension can receive $868.30 per fortnight – or 22,575.80 annually, says Services Australia.
This is why it’s so important to look at your superannuation seriously and find out if you should be doing more to save.
To learn how to maximise your retirement living and aged care options, click here.
If your debts heavily outweigh what you have saved, even a well-above-average super may not be enough.
While your super is important, if your debts heavily outweigh what you have saved, even a well-above-average super may not be enough. That’s why the most important metric when assessing your financial situation is your net worth. This is calculated by taking the total value of all of your assets and deducting your debts.
Your net worth can be used to illustrate your starting point when you’re looking to get serious about saving. The first step is to work out where you’re up to now. There are countless online calculators that can help you figure out what you’re working with.
Consider your assets. Say you own a $700,000 home, have $45,000 in your super account, and emergency savings of $5,000. You would own $750,000 worth of assets.
Next, look at your debts. If you have a new mortgage you likely owe up to 80 percent of your home – or $560,000. With credit card debt of $15,000 and a $50,000 student loan, that means you owe a total of $625,000.
— MoneySmartTeam (@MoneySmartTeam) March 25, 2015
In this scenario, you would have a positive net worth of $125,000. That’s great! Over time, your net worth will increase as you reduce your debts and begin to receive compound interest on your super. However, in another scenario where your debts outweighed your assets, you may have some serious work to do to ensure you’re heading towards a secure retirement.
To learn how downsizing can revitalize your retirement, click here.
Are your super savings on track? Do you have a positive net worth? If your liabilities are greater than your assets, make sure to act sooner rather than later. The more time you have to turn your financial situation around, the better.
What you need to know
1: Source: ASFA Retirement Standard December quarter 2018, national)
2: Source: AIHW Reports (Last updated 07 Aug 2020)
This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.