Will superannuation provide for your retirement?
There are many reports available to Australians to help them understand how much superannuation is needed to retire on a certain income. These range from a ‘modest’ to ‘comfortable’ and take into account the income needed with current age expectancy levels.
According to Deloitte, men aged 65 today need $330,000 in superannuation to provide a modest yearly income of $22,654. For women with greater age expectancy, the figure rises to $360,000 to provide the same income.
What if you’re looking to have a comfortable lifestyle which we can assume would be the goal for most of us. Well the figures rise to $590,000 for a $41,197 yearly income while women would need to have $660,000.
While these figures can vary slightly depending on the calculation method what’s startling is the fact most Australians nearing retirement are not even close to these amounts. This means many will have to rely on the age pension which is currently $21,505 for a single and $32,417 for a couple with no guarantee it will be at this level when you retire.
According to the Association of superannuation funds of Australia, the average male from 60-64 has $85,000 in superannuation assets. For women, an even greater disparity exists with an average of $59,000 in superannuation assets who tend to live longer so need more.
The reality for these people is they will have to work longer and contribute more where possible. The report projects Australians are deferring retirement by two and five years respectively.
For Gen X, the situation is far better with for the average 30 year old on $60,000 (average income) who will retire with $1.1 million in superannuation. This will allow for a modest retirement until 94 but if this worker chooses for a comfortable retirement they will only have until 77 until the funds run out. Deloitte thinks for a comfortable retirement goal will require $1.6million if male and $1.8million if female.
As of today, superannuation has still not yet recovered from pre-GFC levels with total assets less than 2007 levels. We also don’t know when the next one will hit but it has caused many Australians to have to extend their working careers.
For this reason many Australians are choosing to rely on the security of a passive income an investment property can generate. This income can either supplement or replace they need for superannuation assets and give peace of mind that they will be able to enjoy a comfortable lifestyle in retirement.