You may have read quite a few articles, here and elsewhere, in recent years about how much super you should have in your account.
But if you’re tempted to move on without reading ‘yet another one’, it might be time to think again, because the goalposts keep moving and, in these post-pandemic, high cost-of-living times, they have moved significantly.
Australia’s annual inflation rate climbed to 7.3 per cent in the third quarter of this year and all indications are that it is probably now about the 8.0 per cent mark.
Petrol prices may have eased off slightly from a startling peak earlier this year, but the cost of groceries and other household items continues to climb.
Meanwhile, interest rates have gone up every month since May this year and most major banks are forecasting another hike when the Reserve Bank makes its December announcement tomorrow.
Read: Australians expect superannuation shortfall
For those who have retired, it means your super balance won’t buy you as much as it used to, at least for now. Those who have not yet retired might be facing an additional issue.
Although data from superannuation regulator APRA shows personal super contributions climbed 17 per cent in the year to September 30 to $36.6 billion, and total contribution rose 12 per cent to $150 billion, the current cost-of-living pressures may lead to some winding back their super contributions to cover the costs of ongoing price hikes.
For some, depending on individual circumstances, this may be the only viable option in the short term. Others may have income circumstances that allow more flexibility.
Read: Pay off the mortgage or top up your superannuation?
Either way, now is as good a time as any to revisit your super ‘dashboard’ and see if what you have stashed away will be enough to see you through life.
So, how much super should you have in your account right now? According to the Super Guru website, it depends very much on your age.
If you were born in 2000 or later, the Super Guru calculator says you should have a grand total of $0 in your super account. Oh, to be so young again!
For those of us who are just a bit older than that, it’s a different story. Unsurprisingly, the calculator works on a sliding scale with the amount required with age during your working life.
If you are 50 years old or on the cusp of reaching that major milestone, Super Guru says your balance right now should be at least $250,000.
If you’re 55 that amount should be $330,000. Those who, like me, were born in 1965, should have $360,000 put aside.
For 60-year-olds the amount is $449,000 and a 65-year-old should have a balance of $535,000.
Read: Will welfare payment review boost Age Pension?
These figures will give you what Super Guru describes as a “comfortable retirement”. Your definition of ‘comfortable’ may vary of course.
If your super balance exceeds the recommended figure, then a temporary reduction of contributions may help you through the current inflationary period without too much future damage.
For those who come in under the recommended mark, it may be time for serious consideration.
Are you comfortable with your current super balance? Has the cost-of-living crisis caused you to cut back your contributions? Why not share your thoughts in the comments section below?
Between 60 and say 75 when retirees travel, a couple need $90,000 for a reasonable retirement. As you get older the travel falls off but your health bills go up. We retired at 60 and now 82 and 83 and have had between $88,000 – $91,000 income from Super which means you need around $1,8million for a couple to draw down 5%. This year has been bad but already half way through the year our superfunds are back in +ve territory to the tune of 4% so I expect by June it will have made enough to draw down 5% without an issue. The figure we have suggested above is one where you don’t panic how you are going to pay the next bill. We get no aged pension due to assets and income tests but do get the Seniors Health Card as a result of the change this month to an income test limit of $144,000 up from $90,000 – that will cut our health costs a lot.
Everyone is different, your story is YOUR story and does not reflect everyone and going by the people I talk your story is less common.
We’re retired, 61/66 and have been spending around $42,000 per year, living comfortably for 5 year now. New house, $100K car but don’t go on vacations much which is our choice.
We have nowhere near this much! Super came in 1983? I worked from home until 2002,couldn’t afford to pay super too, we ,together have about $250k sounds good as quarter of a million! But per year??
Compulsory Super came in towards the end of my working life. We were busy paying down our mortgage and saving what we could. For all my working life I paid 7.5% of my earnings into the government welfare fund. Maybe the government who has taken this money and spent it on other activities and generous gifts to OS countries should top up the super of those caught like us.
We are not lavish in our spending, and sold our house to downsize, then got penalized for having too much in the bank, then when we got down to the acceptable level of savings (according to Centrelink), the government stopped counting proceeds from the sale of a home when you downsize, but they certainly didn’t give back what they took from us in pension.
So now we struggle with Strata fees (thanks to the government abdicating its responsibility for building certifications and managing insurance fees), health costs (due to the lack of bulk billed services), high energy costs (because the various governments sold off the energy system to private industry and ridiculous fuels costs due to the high taxes on fuel. And politicians have the cheek to say they care about Australia and Australians. Look at the $4.5B in overseas aid and the pittance offered to Australians who have contributed for so long, and are now finding it tough. The system stinks, to put it mildly and the smell is a bunch of scheming rats working out how they can take more off the average Australian!