A lot is written almost daily about how much superannuation you need in Australia.
Many of the articles never mention the Age Pension as superannuation is all about depositing money into the superannuation company’s hands and leaving it there for a very long, long time. Superannuation assets totalled $3.1 trillion at the end of the March 2021 quarter.
I, personally, was told I needed at least $1 million for a comfortable lifestyle when I retire at 65.
The Australian Super Fund Association (ASFA), the peak policy, research and advocacy body for the country’s superannuation industry, states a modest lifestyle will mostly be met by the Age Pension.
It estimates a single person around 65 years needs less than $29,000 per annum for a modest lifestyle, rising to just under $40,000 per annum for a couple. A comfortable lifestyle states $44,412 for a single per year, with $62,828 per year for a couple living comfortably. As you age, the amount of money needed falls.
However, ASFA assumes that the retiree (s) own their own home outright and are relatively healthy.
Brendan Coates, from the Grattan Institute, states that ASFA’s estimates are way too high, and that average income earners eligible for part pensions can retire comfortably with a lot less savings.
“Around $200,000 is in the right ballpark for a couple if they own their own home and $150,000 for singles,” he said.
“If they don’t own their own home, it’ll be higher.”
As property prices soar, home ownership becomes increasingly difficult.
“The boomers will probably be the last people to retire comfortably. And after that, really, it’s going to be highly dependent on what sort of inheritance you get from your parents, or whether you’re in a high-paying job for long enough,” said Michael Rafferty, an associate professor in international business at RMIT, Melbourne.
“We’ve got a retirement system which has evolved so that it’s based on how much money you earn, and how long you earn it. And as well, whether or not you’ve been able to pay your house off.”
Oh dear, the Bank of Mum and Dad is already everyday conversation.
