How much in superannuation do you need in Australia to retire?

Australians may need less superannuation to retire comfortably than previously thought, the nation’s biggest super fund says.

AustralianSuper, a union-backed industry fund, has released new research showing that 94 per cent of Australians get by with less than $1million in superannuation.

The Association of Superannuation Funds of Australia recommends $595,000 for a single to have a comfortable retirement.

Comfortable is defined as an overseas holiday every seven years and an annual getaway within Australia.

Ross Ackland, AustralianSuper’s head of advice and guidance, said many could still live a comfortable retirement with well short of $1million if they have the right planning.

‘Some people think they need to be chasing a seven-figure balance to live well in retirement, but many Australians are thriving with less because they’ve planned around their lifestyle, not just a number,’ he said.

Bestselling finance author Scott Pape said Aussies could easily retire on much less than what was quoted by the Association of Superannuation Funds of Australia, which he said was out of reach for most people.

‘The ABS says that the median super balance on retirement is $250,000 for men and $200,000 for women,’ he said on his Barefoot Investor website in 2022. 

‘So for an average working Aussie, why bother trying?’

Australia’s biggest super fund has debunked the idea that $1million is needed for a comfortable retirement – revealing only half that amount is required (pictured is a stock image)

Pape also warned that super funds may inflate retirement savings targets because they want people to invest more.

‘The people who calculate the ASFA figure are … the super fund lobby. It’s a bit like asking old Dr Kellogg, “What’s the most important meal of the day?” (Breakfast, of course!)

‘If you own your own home, get the aged pension, and you’re willing to do a bit of paid work, you could comfortably retire on as little as $250,000.’

He also revealed what he thought was the best figure, based on data from Super Consumers Australia and the Australian Bureau of Statistics.

‘A group called Super Consumers Australia (a partner of CHOICE) has done the research and come up with their own figures.

‘Not only are their figures much more attainable, they’re based on ABS research on what Aussie retirees spend.’

Super Consumers Australia estimates that a single homeowner needs about $310,000 in superannuation, and a couple needs about $420,000, at retirement to maintain their current living standards throughout retirement.

‘Combined with income from the age pension, homeowners with this amount of super can reliably provide an annual amount of $43,000 and $62,000 until age 90,’ it said earlier this year.’

AustralianSuper, with more than 3.5million members, found more than half or 58 per cent of those with $500,000 in superannuation felt they were well off in retirement

Only one in five Australians retired with more than $500,000 in super during the past five years, a YouGov poll of 1,000 people commissioned by AustralianSuper found. 

Almost half, or 44 per cent, retired with less than $100,000 in super.

A third, or 35 per cent, retired with $100,000 to $499,000 in super. 

Tax office data shows Australians typically have $164,126 in superannuation.

Average-income men in their early sixties typically had $218,169 in super compared with $195,507 for women.

Those with more than $500,000 in super typically earned more than $180,000, putting them in the highest income tax bracket. 

Australians can access their super at 60 but have to wait until 67 to qualify for the age pension. 

Just 0.5 per cent of Australians have more than $3million in super and this group of 80,000 Australians face a new 15 per cent tax on unrealised gains in their account.

AustralianSuper released its findings as the Australian Prudential Regulation Authority chastised Australia’s biggest super funds for failing to adequately prevent cyber attacks in April

This means they would be taxed on paper gains before assets are sold, should Labor’s legislation get through the Senate as expected.

The headline rate of super earnings taxes, for balances above $3million, would double to 30 per cent, based on the 15 per cent unrealised gains tax and an existing 15 per cent tax on earnings during the accumulation phase of super.

AustralianSuper released its findings as the Australian Prudential Regulation Authority chastised Australia’s biggest super funds for failing to adequately prevent cyber attacks in April.

‘Although APRA has consistently emphasised the importance of robust cyber security, it is clear that current controls are not always commensurate with the evolving vulnerabilities and threats, nor with the criticality and sensitivity of the member data and assets they protect,’ it said in a letter to superannuation funds on Tuesday.

AustralianSuper was hacked in April, along with industry super funds Australian Retirement Trust incorporating QSuper and Sunsuper, REST and Hostplus.

Customers of Australia’s top four funds were locked out of their accounts after a cache of passwords was stolen.

Insignia Financial was also affected, as the owner of MLC, Australia’s biggest retail super fund and ninth most popular retirement product overall

Super funds have recovered from the early market uncertainty over new US trade tariffs, with average gains of 2.6 per cent in May for balanced-option funds, new SuperRatings data showed. 

But SuperRatings executive director Kirby Rappell said uncertainty was likely to persist.

‘As we approach the end of the financial year, we see that investors seem to be able to look past tariff uncertainty,’ he said.

‘Following the positive month it appears funds are back on track for a strong financial year result, despite the noise and uncertainty. 

‘While this will likely be a relief for members, we can see that volatility is likely to remain for some time.’

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