Is your super balance enough?

The end of a decade, or the beginning of one, can trigger a time of self-reflection. That reflection can entail a review of life choices. Am I doing what I really want to do? Or it might be time for a personal financial review. Do I have enough super?

We’re right in the middle of a calendar decade at the moment, but individuals may have their own age-related triggers. I’m heading towards one now, as is my oldest brother, who was born a decade before me. I’m 59 and he’s 69. Next year we’ll be 60 and 70 respectively.

It’s the ticking over of that first digit that can be triggering. 58 seems a lot like 59. But 60 looks very different. No doubt my brother is feeling similarly apprehensive about going from 69 to 70.

I’m planning to continue working full time for at least the next few years. It’s a different story for many heading towards 70. Retirement looms large and with it the question of super – specifically the question of whether there is  enough to retire comfortably.

Super at 69 by the averages

As The Motley Fool’s James Mickeboro recently pointed out, people tend not to share their super balances with friends. As a result, few of us get a sense of how we’re travelling compared to our peers when it comes to superannuation.

However, data bracketed by age group is collected by various financial institutions, and averages made available. So what does the average 69-year-old’s super balance look like? 

The first thing to note is that, despite the many apparent steps towards equality in recent decades, the male-female gap remains large – at least at age 69. Association of Superannuation Funds of Australia (ASFA) data shows that Aussie men aged 65-74 have an average balance of $435,900. For women in the same age bracket, the average is $381,700. That’s around 12 per cent less than men.

Is that enough?

Is either of those amounts enough for a comfortable retirement? Returning to data supplied by the ASFA, current figures suggest that a single retired Australian needs $52,085 per year. For couples the estimated annual requirement for a comfortable retirement is $73,337. Those numbers are for retirees aged 65 to 84. For those aged 85 or more the estimates are slightly lower – $48,879 for singles and $67,647 for couples.

If those figures sound daunting, you may be able to comfort yourself with the estimates for a ‘modest’ retirement. ASFA data indicates a modest retirement for Australians aged 65-84 requires $33,134 per annum for singles and $47,731 for couples. For those aged 85+, the corresponding amounts are $30,975 and $44,325. 

ASFA provides definitions of ‘comfortable’ and ‘modest’ here. In broad terms, the ‘comfortable’ will have private health insurance, a range of exercise/leisure activities and the occasional restaurant meal. Those defined as modest will not.

Okay, so now you have an idea of what annual amount is required for retirement, either modest or comfortable. But how do you know if your  current super balance has you on track to achieve any of those levels?

There’s no simple answer to that question because of the number of factors involved. They include the age you will retire (if you are still working) and the age to which you will live. Then there’s the amount your super will earn over the years before and during the period you’ll draw from it. This by itself will have its own dependencies. For instance, where your super is invested and the state of the market in any given year.

So, is my current super balance enough?

Notwithstanding those complexities, ASFA has provided estimated required super balances for Australians aged 67. It suggests a single person of that age would need a balance of $595,000 for a comfortable retirement. A couple of 67-year-olds would require a combined balance of $690,000 for the same.

Your figures will likely be different, as they will be compared to others in your family and friendship circle. However, the amounts above can at least act as a guide or a starting point. If your super balance differs vastly from those, consider seeing a registered financial planner as soon as possible.

In fact, a visit to a registered financial planner is probably not a bad idea regardless. It could mean the difference between a modest retirement and comfortable retirement for you.

Do you know your current super balance? How does it stack up against the above estimates? Let us know via the comments section below.

Also read: Most Aussies don’t know how super works

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