Young Aussies projected to retire more than comfortably after super boost

Ahead of the 1 July Super Guarantee (SG) boost taking employer contributions up to 12 per cent, new modelling has confirmed that younger Australians will now be able to retire with more than enough of the funds to have a ‘comfortable retirement’.

The analysis conducted by the Association of Super Funds Australia (ASFA) found that the super guarantee of 12 per cent would see a 30-year-old earning the median wage of $75,000 a year, with an existing super balance of $30,000 and retiring at the age of 67, accumulate approximately $610,000 in superannuation.

This is $15,000 above the amount estimated by the ASFA Retirement Standard to be required to have a ‘comfortable retirement’ for single people who own their own home.

“This is a major milestone in Australia’s retirement system,” ASFA CEO, Mary Delahunty, said.

“With the super guarantee increase to 12%, we are seeing super fulfil its objective of providing a dignified retirement for ordinary Australians, with today’s 30–year-olds reaping the rewards of decades of progress in our world-class super system.

“The ASFA Retirement Standard has been providing Australians with guidance towards what a comfortable retirement might look like for over 20 years.

“With the 12% super guarantee coming in, we can now say that the system foundations are cemented for young, working people to have a comfortable retirement. It’s a moment all Australians should be proud of.”

The 0.5 per cent increase in guaranteed super will also see an extra $317 contributed to the average Australian worker’s retirement savings balance over the next financial year. According to the Super Members Council (SMC), a 30-year old could retire with $22,000 more in superannuation; ASFA estimates this to be $26,000.

“This boost to retirement savings will help fund the things that matter most – more help with paying the bills, spending time and making memories with the family, trips away and financial security,” Super Members Council CEO, Misha Schubert, said.

“More super means more freedom, more choices and more opportunities to do the things you love.”

The SG increase also comes as the latest ASFA Retirement Standard figures from the March quarter confirmed the cost of a comfortable retirement has jumped by 1.6 per cent over the past year. The average couple now need $73,875 annually to retire comfortably, while the average single requires $52,283 a year.

The results also showed that while decelerating inflation is taking some pressure off retiree budgets, the costs of essential items such as food, energy and health remain quite high.

“Australians in retirement are starting to benefit from a slowdown in inflation, but the prices of essentials are still rising,” Delahunty said.

It’s a timely reminder that achieving a dignified retirement takes planning, and superannuation plays a critical role in making that possible.”

The SMC also noted that only 10 per cent of retirees had super as their source of income prior to the compulsory system introduced in 1992. Now, approximately 90 per cent of Australians aged between 30 and 50 years have superannuation.

“Our super system is the envy of the world because it lifts the retirement savings of everyday Australians, takes pressure off the taxpayer-funded pension, invests capital to grow Australian jobs and companies and – most importantly of all – gives millions of Australians a better life at retirement,” Schubert said.

“When you know that a 30-year-old today will be more than $130,000 better off in retirement, it underlines why the safeguards that protect super for retirement are so important for all Australians.”