One in four Aussies won’t have enough super to retire
More than 4.5 million Australians could be forced to keep working beyond retirement age because they won't have enough money to draw upon in order to get by, new research conducted by comparison website Finder has revealed.
In a survey of 1063 Australians conducted by Finder in September, 23% of respondents said they wouldn't have enough in their superannuation or other investments come retirement, while a further 27% said they weren't sure if they would.
In fact, just 28% of those polled thought that they would have the money in their super - or other investments - to retire comfortably without having to cut back.
'Too little, too late'
"Superannuation is something many Australians, including the younger demographic, don't engage in enough," says Sarah Megginson, money expert at Finder.
"It can be a sad case of 'too little too late' for many who realise that by the time they reach retirement age, their super balance will fall well short of the amount of money they will need."
Unsurprisingly given the gender gap between super balances, the research also found that women (27%) were more likely to be anticipating a retirement shortfall than men (18%).
How much super do Australians need to retire?
Coming up with a single figure that prospective retirees will need to accumulate before packing work in for good is difficult. After all, people will have varying lifestyle and financial needs throughout retirement.
The equation is also made more complicated by whether or not someone owns their own home, as the cost of renting throughout retirement adds to the amount required.
According to the Association of Superannuation Funds Australia (ASFA) Retirement Standard though, in order to live a comfortable retirement at age 67 a couple will currently need $690,000 in superannuation while a single will need $595,000.
Those figures are based on the assumption that the retiree or retirees are eligible for a part age pension and already own their own home.
For a modest retirement though, ASFA calculates that both singles and couples will need a super balance of $100,000. This assumes that they own their own home, but that they will also be eligible to receive the full age pension.
How can Aussies improve their super balances?
While making up any shortfall by retirement will be more difficult for some, Megginson says that there are a range of ways that people can improve their superannuation situation - especially for those who act sooner rather than later.
"First, it's essential to know how much you have in super and to consolidate your funds. You pay fees for each fund you have - it's like having your savings split across three savings accounts and paying account keeping fees on all of them.
"It makes so much sense to bring it all together and spend less on fees, so more money stays in your name, working towards building your wealth."
How is your super fund performing?
Megginson also recommends checking in on your current fund to see how competitive it is. You can check out the Australian Tax Office's YourSuper comparison tool which compares MySuper products on fees, performance and net returns, or Money's own superannuation comparison page.
"Make sure you aren't stuck in a fund charging exorbitant fees and check regularly that your employer is paying your 11% Superannuation Guarantee contributions on time," Megginson says.
And for those looking to top up their superannuation balances beyond the contributions their employers are making, Megginson argues that personal contributions could be an option worth considering.
"Obviously once you put the money into super you can't get it back out so start small - but even $100 a month would make a difference thanks to compounding interest."