Compulsory superannuation and compound interest will enable many working Australians to reach the Association of Superannuation Funds of Australia’s (ASFA) comfortable standard of living by the time they retire, according to the association.
ASFA chief executive Martin Fahy said that while the system had its naysayers, superannuation was setting up current generations of workers for comfort in retirement.
“Someone currently 30 years old, earning $70,000 per year with 9.5 per cent superannuation guarantee (SG) and lifting to 12 per cent by 2025 is well on track to reach the ASFA comfortable standard of living by the time they retire at 67 if they have $50,000 in their super today,” Fahy said today.
“At later ages there can be more catching up to do.”
According to the quarterly ASFA Retirement Standard, as long as a working Australian owns their own home and is in reasonable health, a single person would need $43,694 a year and a couple would need $60,063 to be comfortable. Once they reach 85 years of age, the budget they would need to be comfortable would drop to $39,443 for singles and $55,382 for couples.
At retirement, singles would need $545,000 in super and couples would need $640,000 to be comfortable. This assumes retirees would draw down all their capital and receive a part age pension.
A 40-year-old would need at least $175,000 in their super today while a 50-year-old would need $275,000 and a 60-year-old would need $425,000.
“A 40-year-old needs $100,000 today on a $100,000 salary to make the comfortable standard and a 50-year-old needs $250,000 in super today to get comfortable by 67,” Fahy said.