As the superannuation system matures, many Australians expect it to deliver them a comfortable retirement. But many people are behind the eight ball in terms of achieving that reality.

The latest figures from the Association of Superannuation Funds of Australia show that to achieve a comfortable requirement at 67, a couple would need a combined super balance of $690,000 and a single balance of $595,000.

In both cases, home ownership is assumed and without that, higher balances would be needed.

Some new research from the Australian Retirement Trust (ART), the country’s second-largest super fund, sets a slightly lower target of $549,000 for a single at 65.

Target in focus

But as the chart above shows, Australians are not meeting that target and the shortfall is evident right through the average person’s working life.

However, the picture is not as glum as it seems here because the superannuation system is still far from mature.

For many people retiring now, their early years in the workforce had little superannuation and have enjoyed a super guarantee of 10 per cent or more only in the past three years.

People entering the workforce now will have a super guarantee rate of at least 12 per cent for their full working life.

Nonetheless, we need to deal with current realities and ART and ASFA figures show that many people aren’t in line to reach the target of a comfortable retirement.

Lagging balances

For example, a 45-year-old should have $213,000 in super to be on target to reach $549,000 at 65.

But the median balance for those aged between 45 and 49 in 2021 was $139,850 for a man and $96,575 for a woman so most are well behind in their race for a comfortable retirement.

Even if you take the average balance, which unlike the median is influenced by a small number of higher balances, men have $190,761 and women $96,575.

For those in the first years of retirement the median male balance is $213,986, while for a female it is $201,233.

The average balance for men is $453,075 and for women $403,038, so the better-off segments of society are getting towards the balances ASFA says will provide a comfortable retirement.

Get engaged

ASFA figures also provide a stark look at the income divide in super with those in white-collar professional and managerial jobs ending up with far more superannuation than their blue-collar contemporaries.

ART advice chief Anne Fuchs said the majority of people felt they needed more super.

“Our research found  that 70 per cent of people felt they didn’t have enough super.”

A big problem for many people was that they weren’t actively engaged with their super.

“We found 25 per cent of Australians hadn’t checked their super balance in the last year,” Fuchs said.

And if they aren’t engaged then they can’t make the sorts of decisions they need to make to improve their situation.

“The average balance of our more than 2.3 million members this month is $123,000. If they had $123,000 in cash on their dining room table, I think they would pay attention to it, and we want them to do the same with their super,” Fuchs said.

The issue is that people don’t treat super like an asset they own.

“Imagine if your super balance was your bank account, most people would have logged into it in the last week, let alone the last year,” Fuchs said.

Although paying attention to your super might be an important first step, it is not enough by itself to build a better balance.

Free advice

Most big super funds offer intra-fund advice free of charge.

“Ask for an advice appointment so they can explain what you are invested in and explore our circumstances,” Fuchs said.

This will help you review your situation – how far from retirement you are, what your risk appetite is and how much insurance you need.

That in turn could lead you to choose a higher-returning option or more appropriate and cheaper insurance cover.

Extra contributions

If you are still uncomfortable with your balance “you should consider contributing extra to super rather than just relying on your employer super contributions,” Steps Financial principal Antoinette Mullins said.

The earlier you get around to this the better.

“Adding a small amount earlier in your life can make a big difference over time due to compound interest,” Mullins said.

You don’t have to make big commitments to extra contributions if you have other calls on your income.

“Each time you get a salary increase set a little aside and if you get a bonus or a tax refund put a little away into super,” Mullins said.

If you can afford it then you can salary sacrifice, which has the effect of adding a bit more to your super every pay day.

You can also make concessional or non-concessional contributions if you get a lump sum in cash.

Remember also that if you are part of a couple, teamwork will build an easier retirement because costs are shared and both couple members contribute to super balances.

The New Daily is owned by Industry Super Holdings