Superannuation is setting current generations up for a comfortable retirement, according to the Association of Superannuation Funds of Australia (ASFA). Though a faster increase to the 12% Super Guarantee rate wold make this even more likely.
For people who own their own home, ASFA calculates that a couple needs $60,063 a year to be comfortable in retirement and a single person needs $43,694. After age 85 this drops to $55,382 for couples and $39,443 for singles.
This equates to $640,000 in super at retirement for couples and $545,000 for singles, assuming drawing down on capital and receiving a part pension.
ASFA CEO Dr Martin Fahy said that a comfortable retirement was in reach for many people thanks to compulsory super and compound interest.
“Someone currently thirty years old, earning $70,000 per year with 9.5 per cent Superannuation Guarantee (SG) and lifting to 12 per cent by 2025, is well on track to reach the ASFA comfortable standard of living by the time they retire at 67 if they have $50,000 in their super today,” he said.
“At later ages there can be more catching up to do.”
To reach the comfortable standard of retirement someone aged 40 would need at least $175,000 in their super now. Someone aged 50 would need $275,000 and at 60 would need $425,000.
Dr Fahy said that superannuation was setting current generations up for comfort in retirement, despite the naysayers.
“A lift in the SG to 12 per cent sooner rather than later would mean the great promise of compulsory super would be even more sure,” he said.
ASFA says “a comfortable retirement lifestyle enables an older, healthy retiree to be involved in a broad range of leisure and recreational activities and to have a good standard of living through the purchase of such things as: household goods; private health insurance; a reasonable car; good clothes; a range of electronic equipment; and, domestic and occasionally international holiday travel”.