Australians need to do more for a comfortable retirement

While the Stronger Super initiatives and proposed increase in the Superannuation Guarantee will likely result in greater retirement balances, Professional Associations Super urges Australians not to rely solely on these schemes for a comfortable retirement.

Megan Bolton, CEO of Professional Associations Super, said that while the proposed reforms were a good start, people shouldn’t just rely on them as it still may not be sustainable for their needs.

“We believe increasing the Superannuation Guarantee to 12 per cent is a positive move. This initiative will help raise the balances of working Australians, however it still won’t be enough for people to live a comfortable retirement. A number of reports have shown that individuals can’t rely solely on these changes to secure their financial future, so it’s up to them to take further action,” she said.

“This is especially relevant for members of Professional Associations Super – many of our members are just starting their working lives, and by the time they retire, the age pension may be obsolete. This means that it’s even more vital they take control of their superannuation and plan for their future now,” she said.

According to the ASFA Retirement Standard, the average Australian currently needs $40,121 a year in retirement to have a good standard of living and meet regular expenses, or $54,954 for a couple, which means an estimated retirement balance of around $430,000 needed for a single or $510,000 for a couple.

As it stands, the current average retirement balance of someone aged between 60 and 65 is $245,000 for men and $170,000 for women. For a single male, this will only last six years and for a single woman, four years. While compulsory employer contributions of 12 per cent will result in an extra $108,000 in retirement for a 30 year old earning an average full-time wage, many people will still find it difficult to achieve the superannuation balances needed for retirement – as it will only provide around two and half years of extra income.

“The majority of Australians want to maintain their current lifestyle into retirement, however if they retire with a super balance at their current levels this will be virtually impossible. We’re also living longer than ever before, and this means that retirement balances will need to last longer,” said Ms Bolton.

Professional Associations Super believes that everyone, particularly younger members of the workforce, who may have to rely more heavily on their superannuation in retirement, should undertake some steps to help maximise their super savings.

“It’s important to remember that every little bit helps, especially over the working life of an average Australian. Some simple things people can do is check their eligibility for the government co-contribution; where the government will match personal contributions for people with an annual income of up to $61,920. They can also make voluntary contributions at any time or salary sacrifice. Superannuation is taxed extremely favourably compared to other forms of savings. They can also search for lost super through the ATO SuperSeeker tool, and consolidate their super accounts as they could be paying unnecessary fees to multiple funds. People should talk to their fund and find out what they can do,” said Ms Bolton.

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Published: 2 November 2011