Money
How much super is enough? Spoiler: no magic number exists
When it comes to money, there are lies, damned lies and statistics. “Average super balances” is one of those lies, but read on if you want some guidance as to how much the average person your age might have squirreled away.
By Alex Brooks
The very word “average” is a financial fairy tale, especially if we’re talking about Australia’s superannuation system.
Very few people retire with an average superannuation amount – you retire on your number. And that number is shaped by your real life: how long you’ve worked, whether you earned a consistent full-time income since 1992, and – let’s face it – whether you are a woman (because being female means you will likely have 28 to 35% less than a male).
Superannuation isn’t one-size-fits-all – it’s the sum of your work, your choices and your circumstances. And that’s why superannuation averages can be dangerously misleading.
Yet comparing yourself to others can also spur you to take action to supercharge your super for a better future.
So what’s ‘average’ when it comes to super for people aged over 50?
The average superannuation balance for people aged in their early 50s is between $188,000–$281,000, according to the Deloitte Average Balances report published by Australian Super.
But these ‘averages’ mask financial truth bombs like:
- Some people have $1 million+ in super
- A large number have next to nothing and are thereby excluded from being counted in the averages
- The ‘median’ balance – as opposed to the ‘average’ – was just $66,159 for men and $52,075 for women in 2021-22, according to the Australian Tax Office figures from 2021.
“There are over 3 million Australians currently aged 55 to 64 who are approaching retirement in the next decade,” says Deloitte partner Andrew Boal, a senior actuary and superannuation expert. He adds that around 25% of those people currently have less than $250,000 in superannuation.
But because superannuation grows over time (even if markets take a fall), Andrew says nearly half of those 3 million Australians (47%) will have more than $500,000 in superannuation savings when they are ready to retire – so, on average, superannuation is looking up for more of us aged in our 50s today.
What average and median super balances look like in Australia
Deloitte have researched average superannuation balances by age group, taken as a snapshot in June 2024.
As mentioned earlier, these averages mask plenty of disturbing truths – especially if you are a woman, self-employed or haven’t consistently contributed to your super.
The Australian Tax Office has published older numbers from 2022, which are slightly different to the Deloitte numbers, but give you an idea of how widely the ‘averages’ and ‘medians’ can vary
(The average adds all values and divides; the median is the middle value, which is better for uneven data like superannuation.)
What sort of income does the average and median balance pay in retirement?
While averages and medians can offer a rough guide, your retirement picture is unique. Factors like tax, home ownership and Age Pension entitlements can significantly shape your retirement income, so personal financial advice is key.
To give you a sense of how your super could translate into income, we've included both the Mercer and ASIC Moneysmart calculators. These tools can paint a clearer picture, but remember – it's your super balance and financial choices that truly matter, not the averages.
Andrew has a warning about super calculators: people need to know the assumptions underpinning the calculations. There are some big superannuation calculator assumptions to understand.
Now this gets complex, so read carefully!
- Investment Returns: Growth assets can outperform cash, but they also come with more risk, which some calculators might overlook.
- Future Income Growth: Some calculators only use inflation (CPI), which shows a smaller target, while others use average wages (AWOTE), which suggests you'll need a much larger balance.
- Timing and longevity risk: If you want to retire earlier than age 67 or live longer than ‘average’, then these projected income amounts will change.
"Retirement calculators can give very different results depending on how they adjust for inflation. If they assume your spending just keeps up with CPI, it shows a lower need. But if they assume your spending grows in line with wages, you’ll need a lot more," Andrew says.
The Mercer calculator assumes you will live to 105, the Moneysmart calculator uses only inflation to predict income and the AMP retirement income simulator assumes you live to the average age and want to spend around $1,200 a week in retirement.
These calculator differences highlight the need to get personalised financial advice based on your unique circumstances.
What if I have less than average super for my age?
Because of the ‘lumpy’ nature of superannuation balances, it’s better to compare yourself to the median superannuation balance for your age than the average. If you have a below-median superannuation balance, then it’s good to play catch up by contributing extra to swell your super.
Even 5 years of maximising what’s called your concessional contributions cap can significantly boost how much you will be able to spend after retirement. It’s also important to take advantage of the Australian Tax Office (ATO)’s superannuation tool to make sure you’re in a solid MySuper fund, and not leaking fees or insurances.
Most super funds will provide you with some sort of general financial advice about your super at little or no cost – so take advantage of this, too. Even a little bit of financial literacy (and action!) can go a long way for people with below-average super balances.
Now obviously you shouldn’t contribute extra to your super if you can’t afford it, but looking into other strategies like a transition to retirement or using the downsizer bonus can pay back later on.
The oh-so-important role of owning your own home in retirement
If you have a low superannuation balance but own your own home, that is still a big win.
For people still renting as they move to retirement, it may be worth strategising how to purchase your own home by taking your super as a lump sum. (Citro publishes a guide to retirement locations in Australia and overseas).
Australia’s retirement system distinctly advantages people who own a mortgage-free home, mostly because your home doesn’t count as an asset if you want to collect the Age Pension.
“If you’ve got $800,000 in super and don’t own your home, you’re actually better off buying a $500,000 unit – not just for shelter, but because suddenly you qualify for the full Age Pension. It’s a logical financial argument,” Andrew says.
Andrew says most Australians don’t realise they can get money from their super fund as retirement income as well as the government’s Age Pension – and he argues too many Aussies fail to apply for the Age Pension because they don’t even realise it’s available.
“Most people, at some point in their retirement – probably up to 80% of Australians – will get at least a part Age Pension, and that will substantially boost the amount of income they’ll have in retirement,” he says.
The bonus of owning your own home can also give you more flexible retirement income boosts like a home reversion scheme, reverse mortgage or home equity access scheme.
Even if you have a high superannuation balance, using clever annuity-style products to insure against your longevity risk can get you at least $1 of the Age Pension, and all the bonus concessions that come along with that.
(Psst, there’s also an interesting Peak Pension strategy people with low super balances can think about, too.)
Just remember, your retirement and the superannuation that pays for it will never be ‘average’ – it’s uniquely yours. So put your stamp on it.
This article contains general information only. It is not financial advice and is not intended to influence readers’ decisions about any financial products or investments. Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their financial circumstances, objectives and needs.
Feature image: Canva/CraigRJD
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