How Much Super Do I Need to Retire?

How much super you need to retire depends on the retirement income you want, your life expectancy, whether you own your home, and your Age Pension eligibility. Industry benchmarks suggest a comfortable retirement for a couple requires a combined super and savings balance of roughly $[VERIFY: ASFA Retirement Standard, current quarter], while a modest lifestyle needs considerably less.

These super benchmarks are general guides. Your own super target depends on your spending habits, whether you will have debt in retirement, and how much of your retirement income will come from the Age Pension.

The average super balance by age Australia data shows that super balances rise steadily through working life but many Australians retire with less than the benchmarks suggest they need. Average super balances for people in their 50s and 60s are typically below $[VERIFY: ATO super statistics, latest year], with a wide spread between the median and the mean super balance.

Super balance averages mask the fact that many people have multiple super accounts, insurance eroding super balances, and gaps in super contribution history. Your own super balance is what matters for your super projection.

How much super should I have at 50 is a common question, and a widely used guide suggests aiming for roughly two to three times your annual salary by age 50 to stay on track for a comfortable retirement. The exact super target depends on your income, retirement age, and whether you own a home.

If your super balance at 50 is below this guide, you still have time to catch up through higher super contributions, but the earlier you act the more compounding works in favour of your super balance.

Whether the question is my super enough to retire on can be answered by comparing your projected super balance at retirement to the retirement income you expect to need each year. If your projected super balance can sustain your target retirement income for 25 to 30 years, factoring in Age Pension support, your super is likely enough to retire on.

If the super projection falls short, the super gap can often be closed through higher super contributions, lower super fees, a different super investment option, or working a few years longer before retirement.

How much super you need to retire at 60 depends on the retirement income you want and how you bridge the gap until Age Pension age, which is currently 67. Retiring at 60 means funding your own retirement income for seven or more years before the Age Pension begins, so you need a larger super balance than someone retiring at 67.

A super projection that looks adequate for retirement at 67 may fall short for retirement at 60 because your super money needs to last longer and starts drawing down sooner.

How much super you need to retire at 65 depends on your target retirement income and your other assets. Retiring at 65 means funding your retirement income for about two years before Age Pension eligibility at 67, so the super bridge is shorter than retiring at 60 but the super balance still needs to last 25 years or more.

The superannuation calculator can model different retirement ages so you can compare retiring at 60, 65, and 67 side by side.

The Superannuation Guarantee rate is the minimum percentage of your ordinary time earnings that your employer must pay into your super fund. The Superannuation Guarantee rate is set by legislation and has been increasing over time, which means the superannuation calculator adjusts future super contributions according to the legislated schedule. [VERIFY: current SG rate and legislated future increases]

Because the Superannuation Guarantee rate is legislated, the superannuation calculator projects future employer super contributions using the scheduled SG rates rather than a flat percentage.

Whether you should salary sacrifice into super depends on your income tax bracket, your years to retirement, and your concessional contribution cap. Salary sacrifice reduces your taxable income now and grows your super in a low-tax environment, but the super money is preserved until retirement age, so salary sacrifice is not suitable for money you may need sooner.

For higher-income earners with time on their side, salary sacrifice into super is often tax-effective. The concessional contributions cap limits how much super you can add each year. [VERIFY: current concessional contributions cap]

Fees affect your super balance by compounding against you over your entire working life. A super fund charging even half a percent more per year in fees can leave you with a meaningfully lower final super balance over 30 years, because the super fee is charged on the total super balance each year, not just your super contributions.

Over a full career, the difference between a low-fee super fund and a high-fee super fund can amount to tens of thousands of dollars, even when super investment returns are otherwise similar.

You generally cannot access your super before retirement because super is preserved until you reach your preservation age and meet a condition of release. Limited early super access exists for severe financial hardship or on compassionate grounds, but the early super access criteria are strict and withdrawing super early usually causes long-term damage to your final super balance.

Your super preservation age depends on your date of birth. [VERIFY: preservation age table] The superannuation calculator assumes your super remains invested until your chosen retirement age.

When you retire, your super can be withdrawn as a lump sum, used to start an account-based pension that pays you a regular retirement income, or a combination of both. Most retirees use an account-based pension because the account-based pension keeps your super invested while providing tax-effective retirement income, and the account-based pension can work alongside the Age Pension.

The superannuation calculator projects your super balance at retirement; deciding how to draw that super balance down as retirement income is a separate decision that benefits from personal financial advice.

Whether you should consolidate your super accounts depends on what you would give up by closing a super account. Multiple super accounts usually mean duplicate super fees and sometimes duplicate insurance, so consolidating super accounts often saves money. However, some older super accounts carry insurance cover or defined benefits that would be lost on super transfer, so check before you roll super accounts together.

You can see all your super accounts in one place through your myGov account, which makes it easier to decide whether super consolidation is right for you.