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How much superannuation should I have?
It’s the age-old question: how much superannuation should you have when you retire?
The amount of superannuation you need to have at retirement is based on how much money you would expect to spend each week during your retirement. That, in turn, depends on whether you expect to lead a modest retirement or a comfortable retirement.
How much super do you need at retirement?
The latest research from the Association of Superannuation Funds of Australia (ASFA) shows that to have a comfortable retirement, you may need a superannuation balance of:
- $545,000 for single retirees
- $640,000 for couples
ASFA estimates you would need the following amount per week:
Comfortable lifestyle (p.a.) | Modest lifestyle (p.a.) | ||
Couple | Single | Couple | Single |
$68,014 | $48,266 | $44,034 | $30,582 |
Source: ASFA, Budgets for various households and living standards for those aged 65-84 (September quarter 2022)
Keep in mind that the reason people on modest lifestyles generally require so much less money is because they may qualify for a far bigger age pension.
Ultimately, the exact amount you need will depend on your specific financial situation and needs. But you can plan ahead by calculating how much you’d want to have each week/year, projecting how much you may have at retirement based on your current balance, and adjust accordingly.
How to calculate how much you will need for superannuation
Whether you’ve just started your first full-time job, are halfway through your career or a few years from retirement, it’s always helpful to crunch the numbers on the gap between your projected balance at retirement, and how much you want at retirement.
Find your projected balance
Typically, your current superannuation fund will be able to show you this information online, through your latest superannuation statement, or by speaking to its customer service team. For example, if you were a 30-year-old with $50,000 in your superannuation fund, your provider may predict that over the next 35 years, your balance may climb to $500,000.
Figure out how much you need at retirement
This is a highly personal part of the superannuation process, as what you see as an adequate superannuation balance may not suit the lifestyle of another Australian.
To help you determine if you need a modest or comfortable balance, here is how ASFA defines retirement lifestyles:
Category | Comfortable | Modest | Age pension |
Holidays | One annual holiday in Australia | One or two short breaks in Australia near where you live | Shorter breaks or day trips in your own city |
Eating out | Regularly eat out at restaurants. Good range and quality of food | Infrequently eat out at restaurants. Cheaper and less food | Only club special meals or inexpensive takeaway |
Car | Owning a reasonable car | Owning an older, less reliable car | No car – or, if you do, a struggle to afford the upkeep |
Alcohol | Bottled wine | Cask wine | Homebrew beer or no alcohol |
Clothing | Good clothes | Reasonable clothes | Basic clothes |
Hair | Regular haircuts at a good hairdresser | Regular haircuts at a basic salon | Less frequent haircuts or getting a friend to do it |
Leisure | A range of regular leisure activities | One paid leisure activity, infrequently | Free or low-cost leisure activities |
Electronics | A range of electronic equipment | Not much scope to run an air conditioner | Less heating in winter |
Maintenance | Replace kitchen and bathroom over 20 years | No budget for home improvements. Can do repairs, but can’t replace kitchen or bathroom | No budget to fix home problems like a leaky roof |
Insurance | Private health insurance | Private health insurance | No private health insurance |
If you fall into the comfortable lifestyle category, and you have a spouse or partner, you may determine that you need a super balance of at least $640,000 at retirement, as per the ASFA’s figures. If at age 30, your projected balance is only $500,000, then you know you need to increase the balance of your fund by $140,000, whether through contributions or alternative investment strategy.
Boost your super balance
There are a few options available in Australia to consider if you’re hoping to boost your superannuation balance.
- Salary sacrifice – Make concessional contributions to your super balance from your pre-tax income, as discussed with your employer. These contributions are taxed at a rate of 15%, which is generally lower than your marginal tax rate.
- Personal contributions – Make voluntary non-concessional contributions to your super account, separate from a salary sacrifice agreement, from your after-tax income. This is capped at $110,000, as of 1 July 2021.
- Spouse contributions – You can also contribute to the super fund on behalf of a spouse if either are not currently working (including being on parental leave), or earning a low income.
- Change your investment strategy – The investment options you choose also contribute to the balance of your super fund. These include growth investments, balanced investments, conservative investments or cash investments. Depending on your risk appetite and the current market, you may want to consider if your current investment option is best serving you, or if an alternative would be better.
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Product database updated 22 Nov, 2024
