Workers in their twenties, thirties and forties who stay single and don’t get a decent pay rise will need to have much higher superannuation balances to afford a comfortable retirement.
The Association of Superannuation Funds of recommends $595,000 for a comfortable retirement by the time someone turned 67 and qualified for the age pension.
Such a balance would be enough to fund an occasional overseas holiday or a new car every few years for someone who has paid off their home.
To get there, someone on a median income of $65,000 before tax needs to have $220,000 in super savings by age 45.
But someone on $90,000 a year – a level slightly below the average, full-time salary of $95,581 – is only required to have $176,000 in retirement savings.
That’s a 25 per cent difference in required super between a middle and an average-income earner.
Middle-income workers in their twenties, thirties and forties need to have much higher super balances to have a comfortable retirement if they remain single (pictured are young women at Sydney’s Royal Randwick Racecourse)
The requirement to have a lot more in super is even more pronounced at age 30.
A middle-income earner needs $68,000 in super savings, compared with just $8,000 for someone on a $90,000 salary.
That means someone on $65,000 needs to have eight-and-a-half times the level of super.
Earning a $90,000 salary at a young age also helps with no super even needed at age 25 to have a comfortable retirement.
But a middle-income earner on $65,000 would need to have saved $29,000 in super by the time he or she was 25.
The compulsory employer super contribution is 11 per cent by it’s rising by half a percentage point increments on July 1 each year until it reaches 12 per cent in 2025.
ASFA said this meant most young people were on track to have enough saved up for a comfortable retirement, as more went into super instead of future wage increases.
The Association of Superannuation Funds of recommends $595,000 for a comfortable retirement by the time someone turned 67 and qualified for the age pension (pictured is a stock image)
‘Younger ns who will receive contributions for the great bulk of their working life at the rate of 12 per cent of wages will be much more likely to be on track,’ it said.
For couples, ASFA recommends $690,000 for a comfortable retirement.
But even $100,000 is enough to allow someone to get by modestly, provided they owned their home outright.
The median super balance for men aged 66 is $216,000, compared with $202,000 for women of the same age.
Super Consumers recommends $258,000 for a modest retirement which would mean holidaying in rather than going overseas every few years.
ns can salary sacrifice to have more of their pay go into super, and pay a low concessional tax rate of 15 per cent.