How to prepare your super to take flight
If you’re preparing to come back to work or have recently returned, here are a couple of quick things you can do to dust off your super account and make sure it’s in good shape.
What's the average super balance for your age?
One of the most common questions people have when it comes to their super is: how much money will I need for retirement?
Like many things when it comes to your finances, however, the amount of super you need to live out your retirement dreams depends on your personal circumstances and the goals you have for your time after work.
As a baseline, the Association of Superfunds of Australia (ASFA) has calculated that a single person will need a balance of $595,000 at 67 to live a comfortable retirement, while a couple will need a combined balance of $690,000, with both these figures assuming the retirees own their own home outright and will eventually draw down their entire balance and receive a part Age Pension.
But while these figures can give you something to aim for, it can be difficult to gauge whether your balance is on track through your career – while you may know how compound interest works in theory, it can be hard to picture how your $40,000 balance now will grow to that figure you’re dreaming of.
Here are a couple of benchmarks you can look at to check whether you’re on track.
The average (or median) balance for your age
One benchmark that can help you get an idea of how your balances compares to others is the average and median super balances for employed people your age across Australia. While the average value is calculated by dividing the total balance by the number of people in the age group, it may skew higher due to individuals with very high balances that may not be the norm. The median value, on the other hand, is in the middle of the data set.
The values are split into two categories, for men and women, to take into account the fact that women usually have lower balances:
| Age | Men (average) | Men (median) | Women (average) | Women (median) |
|---|---|---|---|---|
| 18 - 24 | $8,148 | $4,198 | $7,740 | $4,045 |
| 25 - 29 | $25,981 | $17,243 | $24,740 | $17,381 |
| 30 to 34 | $56,344 | $41,849 | $51,400 | $38,681 |
| 35 to 39 | $95,937 | $74,062 | $86,140 | $65,417 |
| 40 to 44 | $139,431 | $106,771 | $123,993 | $91,590 |
| 45 to 49 | $190,716 | $139,850 | $166,937 | $116,886 |
| 50 to 54 | $246,955 | $167,002 | $215,115 | $137,930 |
| 55 to 59 | $316,457 | $191,263 | $277,327 | $158,462 |
| 60 to 64 | $402,838 | $211,996 | $361,539 | $183,524 |
| 65 to 69 | $453,075 | $213,986 | $428,738 | $207,540 |
| 70 - 74 | $509,059 | $216,564 | $481,483 | $214,431 |
| 75 and over | $507,556 | $174,179 | $475,422 | $171,716 |
While these numbers can give you an initial indication of whether your balance is keeping up with your peers, it’s important to remember that they’re just that – an indication. Hitting the average may not necessarily mean your balance is on track to reach ASFA’s standard for a comfortable retirement.
Why are the average balances for women lower?
There are a couple of factors that lead to women having lower balances than men through their working lives, such as the pay gap and women taking time out of the workforce to look after their family. While many of these factors are structural, there are a couple of things women can do to boost their super.
ASFA's Super Guru calculator
ASFA’s Super Guru has created a calculator that can let you know how much super you should have today to be on track to reach the comfortable retirement standard by 67. This is based on your age now:
If your balance is on track:
That’s great! But it’s important not to get complacent. While super is a long term investment, which means you don’t need to be checking your balance every day, you should check in from time to time to make sure everything’s still working like you need it to.
For example, are your personal details up to date? Do your investment options still suit your needs and goals? Is your level of insurance cover appropriate?
You can give your account a once-over by logging in.
If your balance is lower:
The most important thing is not to panic – as the saying goes, the best time to plant a tree was 20 years ago, the second best time is now.
There’s a lot you can do to start getting your balance back on track, like:
- Combining your super if you have multiple accounts – this can reduce the total fees you pay
- Checking for lost super
- Reviewing your investment options
- Seeing if you can make voluntary contributions
A Super Adviser can help you get started.
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