Australians Estimate They Need Nearly $650,000 to Fund Their Retirements

Australian dollars are shown in Sydney, Australian, on March 10, 2015. Dominic Lorrimer/Getty Images

A recent survey has found that Australians may need twice as much of what they have in their superannuation accounts to fund their retirement.

The financial comparison website Finder surveyed 1,063 adults to find out the current situation among working Australians.

One finding was the average amount of savings the respondents said they needed for their retirement was $641,223 (US$433,700).

The figure was much higher than the super balance of an average working Australian about to retire.

Recent data from the Australian Taxation Office showed the average balance of a male worker aged 60-64 was around $402,838, while the figure for females was $318,203.

This means most Australians will likely run out of money halfway through retirement.

With a super balance of $641,223, an average retiree would have an income of $33,749 per year, based on the retirement age of 64 and the average life expectancy of 83 in Australia.

However, the above amount is far from enough for retirees to afford a comfortable life after they stop working.

According to the Association of Superannuation Funds of Australia, a peak industry body, the budget for a modest lifestyle for people aged 65-84 was $32,417 a year for single retirees, and $46,620 for couples as of the September quarter of 2023.

For a comfortable lifestyle, the budget needs to increase to $50,981 a year for singles, and $71,723 for couples.

Under current laws, Australian employers must pay super to their workers, on top of basic salaries, and other benefits.

The minimum super rate is 11 percent of employees’ ordinary earnings, in the 2023-2024 financial year, and will rise to 12 percent in the 2025-2026 financial year.

Expert Says Workers Should Contribute More to Their Retirement

According to Graham Cooke, the head of consumer research at Finder, an Australian earning $80,000 a year could accumulate approximately $630,000 with the 11 percent super guarantee rate if they started working at age 20.

However, he warned that people should not rely on the minimum contribution by employers as it might not be enough for a sufficient retirement.

“A significant number of Aussies are falling short of their desired retirement savings,” Mr. Cooke told The Epoch Times.

“There is a growing gap between what individuals anticipate their retirement nest egg will be and the actual amount they are able to accumulate.”

The financial expert encouraged Australians to make extra contributions to their super accounts whenever possible.

“Every extra contribution to your super is planting a seed that will grow through to retirement,” he said.

“Every extra contribution is an investment in your future self.

“Consider making small monthly contributions–small sacrifices here and there can add up significantly and ensure a comfortable retirement.”

Contributing to Super As Early As Possible

Sarah Megginson, a personal finance expert at Finder, advised people to contribute extra funds to their super accounts as soon as they enter the workforce.

“The younger you start making extra repayments, the better, and advancements in your career and pay rises all mean bigger contributions to your retirement fund, too,” she said.

“Thanks to compounding, even making an extra contribution of $50 a month from your 20s onwards can mean an extra six figures worth of wealth in your retirement fund.”

Meanwhile, Mr. Cooke said people also needed to check if their super fund could deliver the savings they wanted and shop around for better deals.

“With the rising cost of living, it’s critical to assess whether your superannuation fund is working in your best interest,” he said.

“Start by consolidating your super into one and choosing a fund that offers low fees and the right risk profile.”