WEALTH HUB JOURNAL

How Much Should Be in Your Superfund Before You Retire?

To enjoy the retirement you deserve, you should be making the most of your superfund today. But how big does your super need to grow for you to be comfortable in your golden years? That’s something Wealth Hub Australia can help you determine. To best plan for your future, start by defining the retirement lifestyle you want.

Let’s take a look at what comfortable retirement means and break down how much you should have in your super when you hit life’s milestones.

Modest vs. Comfortable Retirement

When most Australians picture retirement, they see travel, leisure, and the ability to comfortably buy food and pay their bills. However, things have a way of costing more than you originally intended, and if you’re looking forward to ocean breezes and drinks on the patio, you probably need to save more than you think.

The 2021 ASFA Retirement Standard estimates a healthy Australian couple aged 65 who own their own home would need an annual budget of $40,829 to afford fairly basic activities and $62,828 to retire in comfort.

Of course, the true amount you’ll need will fluctuate based on your specific situation and your retirement goals. If you have streams of passive income from rental properties or other sources, or if you are hit with medical fees or are still paying off your home, the amount of money you should have in your super to achieve the life you want will vary.

Did You Access Your Super Early During COVID?

If, like many Australians, you accessed your super early during the pandemic, this will have long-term effects on your finances. To overcome the penalties of early withdrawal, your retirement strategy will likely need some course correction.

For example, if you took advantage of the government’s early withdrawal offer and cashed out $20,000 from your superfund at age 35, you could have $68,245 less in your super by the time you reach retirement. If you did the same at 25, you could be headed for a loss of more than $100,000.

It goes without saying that this will put a sizeable dent in any plans you have for building wealth, achieving financial independence, and leaving a legacy. Our team at Wealth Hub Australia can advise you on adjustments to your retirement plan that will help you make up the difference.

How Much Should Be in Your Super Right Now?

It’s easy to ignore retirement planning if you’re still relatively early in your career and other priorities have your attention, but age 65 will get here, and you need to start planning now if you want a retirement your future self will thank you for.

So, what should your superannuation balance be at age 30? What about 40, 50, or 60? Here’s an estimate of how much you should have in your super in each decade.

 30s
You aren’t in your twenties anymore—as if you needed us to tell you that! While you may still be hitting life events like marriage, children, and first mortgages, you should be contributing $9,000-11,000 to your super each year. According to this calculator, by age 30 you should have a balance of $54,000 in your super to retire comfortably. If you’re 35, it should be $93,000. No one actually thinks skipping the avocado toast will get you there, but it is time to start taking it seriously.

40s
You may still feel too young to be focused on retirement, but if you’re on track with the ASFA estimate, by age 40 you should have $143,000 in your super, and you should be paying $10,000-11,000 into it annually. By age 45, you should have $195,000.

50s
By this point you’re hopefully reaching the end of paying off your mortgage, if you haven’t already. Even though retirement is still relatively far off, it’s probably on your mind if you plan to stop working in the next decade or so. By age 50, your recommended superfund should be at $257,000, and by 55, it should be hovering around a third of a million dollars.

60s
You’re headed to the finish line. By age 60 (at which you’re eligible thanks to the downsizer incentive), the ASFA recommends a balance of $415,000 in your super, and by the magic year of 65, you should have over half a million saved.

New in the 2021-22 budget, you’re allowed to add $300,000 to your superfund from the sale of your family home without any effect on your pension eligibility. If you’re significantly behind on your recommended superfund balance, this is a great way to make up for lost time and retire well.

Whether or not you’re confident in your current superfund balance, our team of professionals at Wealth Hub Australia can help you grow your balance, protect your savings, and make the most of what you’ve saved. Contact us today to learn how you can leverage government incentives to build wealth and prepare yourself for the retirement you deserve.

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