How would your superannuation stack up if paid as a monthly salary?

Your super balance might look good as a lump sum figure, but would it suffice if divided into regular monthly repayments in retirement? 

Superannuation is likely to be one of the biggest assets most of us will ever own, with expectations it could become the average Aussie’s greatest asset, overtaking the family home, in the coming decades1.

If you checked your super balance recently, regardless of whether you were pleasantly surprised or a little displeased, it’s important to consider how far that lump sum of money (no matter how good or bad it may look) might actually go when it comes to living the lifestyle you want in retirement.

Will your super go the distance?

Depending on your situation (and how old you are currently), a super balance that contains tens of thousands, hundreds of thousands, or even a million dollars or more might look very impressive, but when you break it down in terms of a monthly budget, the reality could still be a little lacklustre. 

If you haven’t given much or any thought to how far your super might go in retirement, bearing in mind you generally have to be a certain age to access it, here are some things worth considering.

How long you intend on working for

With no definitive retirement age in Australia, the date you exit the workforce will probably come down to personal circumstances and whether you can afford it.

Meanwhile, research released last year revealed fewer people were retired in comparison to years gone by and that retirement was not necessarily a one-time event2, with many returning to employment, often on the back of financial necessity, followed closely by boredom3.

Whether health issues could impact your plans

Health is a key factor when it comes to workforce participation for mature-aged workers, and subsequently in your ability to accumulate super and private savings to fund your retirement.

Research shows the key issue for Aussies is that between age 60 and 70, the proportion of people reporting fair or poor health increases, with predictions that by 2035, one in four men and one in five women in their 60s will have poor or at best, fair health4.

What type of lifestyle you’d like to live

If you’re in or approaching retirement, you may be thinking about things such as living costs, utility bills, health care and even helping out younger family members with their future financial goals.

Given you may be looking at what could be many years in retirement, another thing to give some thought to is keeping some money aside for the fun stuff—i.e. your own pastimes and recreation.

Australia’s increasing life expectancy

Life expectancy in Australia is increasing, so you’ll want to account for a longer retirement than previous generations.

To put it into perspective, around 40 years ago, the number of Aussies over age 85 was 80,000 and in about another 40 years that number is projected to reach around two million5.

If you plan on retiring at 60 and live beyond age 85, what that means is you may be looking at funding a retirement that could span more than 25 years—in other words, a quarter of a century.

How much might you need each month?

Figures from September 2017 show individuals and couples around age 65, who are looking to retire today, need an annual budget of $44,011 and $60,457 respectively to fund a comfortable lifestyle6.

That equates to a monthly budget of around $3,668 for individuals and $5,038 for couples.

To live a modest lifestyle, which is considered better than living off the Age Pension alone, individuals and couples around age 65 would need an annual budget of $24,506 and $35,189 respectively7.

That equates to a monthly budget of around $2,042 for individuals and $2,932 for couples.

Also note, the above figures assume people own their home outright and are relatively healthy8.

What about the Age Pension benefit?

If you’re hanging your hopes on the government’s Age Pension, the maximum annual Age Pension rate is currently around $23,254 for individuals and $35,058 for couples9.

As a monthly income that works out at about $1,938 for an individual and $2,921 per couple10.

Meanwhile, keep in mind to be eligible for a full or part Age Pension, you must be 65 or older and satisfy an income test and an assets test, as well as other requirements11.

You can check out your Age Pension eligibility age below12.

Date of birth Age Pension eligibility age
Before 1 July 1952 65
1 July 1952 - 31 December 1953 65 years and 6 months
1 January 1954 - 30 June 1955 66 years
1 July 1955 - 31 December 1956 66 years and 6 months
From 1 January 1957 67 years

Where you can go for assistance

If some of the figures above have made you realise that what you’ve saved as a lump sum may not be enough to cover you month to month, speak to your financial adviser.

If you don't have an adviser but would like some advice, you can call us on 131 267 or use our find an adviser search engine to locate one near you.

In the meantime, check out our article 7 ways to boost your super for further tips, or give our super and retirement calculators a go, as they may be able to help you crunch some numbers.

Other articles that may be of interest include:

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Important information

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This information is provided by AMP Life Limited. It is general information only and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.

All information in this article is subject to change without notice. Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.