With an average balance of only $145,388, the ordinary Australian doesn’t have nearly enough money to retire on, according to new tax office figures.
This falls well short of the $535,000 that the Association of Superannuation Funds of Australia (AFSA) recommends for retirees who are 67 years old.
Only a small percentage of the richest Australians, those making more than $180,000 per year, had enough retirement savings; those on middle-class and ordinary wages fell well short.
According to new Australian Taxation Office data, the average worker had a balance of $145,388 in the 2019–20 fiscal year. Men had an average balance of $161,834 while women had an average balance of $129,506.
levels are a lot lower than the $164,000 For house owners receiving the elderly pension at 67, ASFA advises that a person should have $535,000 saved up by the time they are 40 years old.
Workers in the highest tax band, who make over $180,000 annually, had average superannuation balances of $575,470, the only group exceeding ASFA’s retirement guideline.
In the $37,000 to $90,000 tax band, middle-class and somewhat below-average income individuals had average super balances of $116,698.
This covered the average taxable salary of $63,882 for full-time and part-time workers, with men earning $74,559 and women $52,798.
Average full-time employees earning $90,917 were among those in the $90,000 to $180,000 income range, and they had average retirement savings of $249,830.
It’s interesting to note that individuals in the tax-free income category of less than $18,200 had average super account balances of $143,479, indicating that baby boomer retirees who live off the portion pension and don’t work make up the majority of this group.
They had average super balances that were larger than individuals earning between $18,200 and $37,000, who normally had retirement savings of $92,490.
The ASFA proposal of $535,000 for those getting the pension at 67, or $545,000 for those retiring a little earlier, according to Pape, is unreasonable since it assumes a person needs $46,494 per year to survive.
“The super business has played to the wealthy in the members’ stand for far too long,” Pape added.
He instead supported a suggestion made by Super Consumers Australia, which feels that $258,000 is enough for someone who has paid off their mortgage.
The director of Super Consumers Australia, Xavier O’Halloran, said that the new tax office data, which shows average super balances by tax band, was inaccurate since affluent individuals of any age group may skew the statistics.
He told Daily Mail Australia, “What this doesn’t account in is age and proximity to retirement.”
Instead, Mr. O’Halloran found encouragement in tax office data that showed men and women in the 65 to 69 age range had median retirement balances of $180,000 and around $175,000, respectively.
They totaled $355,000, which is only a little bit more than the $352,000 his organisation advises for couples surviving on $56,000 year with the half pension.
For the couples, it seems that they are about on course, he said.
In couple homes, there are benefits and cost savings that may be shared.
However, the median data for the 60 to 69-year-old age group revealed that single individuals would suffer without the federal government’s equity release programme, which allowed them to receive assistance in return for the state seizing a portion of their home when it sold.
Singles are a little behind, according to Mr. O’Halloran.
They’ll need to consider other methods to save money, work longer hours, or consider their goals for retirement and if they want to make budget cuts.
According to Super Consumers Australia, a thrifty person who has paid off their mortgage would need to have $73,000 saved up in order to get by on $29,000 per year.
But for a renter to handle unforeseen cost of living hikes, retirement funds would need to total $140,000.
It suggests setting up $743,000 for those who want to enjoy a wealthy retirement lifestyle, which would cost $51,000 year and cover expenses like a yearly trip abroad and a new automobile every few years.
Employer super contribution rates in Australia increased to 10.5% on July 1 from 10%, and they will continue to rise by 0.5% year until they reach 12% in 2025.
According to tax office data, the median super balance, which represents individuals in the middle, was even worse, at only $49,374, with males having $56,425 and women having $44,634 respectively.