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CLAIMS Australians need at least $1 million in superannuation to live a comfortable retirement are misleading and much smaller balances should be enough, experts say.
Industry experts have taken issue with claims Australians must have seven-digit super balances once they stop working to live a financially comfortable existence.
HOW do you make as much superannuation as possible?
The Australian Institute of Superannuation Trustees has today released the paper,
Busting the $1 Million Retirement Myth which quashes arguably Australias foremost authority on superannuation Jeremy Coopers view that Australians need $1 million in their retirement kitties.
AIST chief executive officer Tom Garcia said the core problem with these calculations was that industry commentators failed to consider the important role the age pension played in boosting retirement income levels.
Most Australians, including most of those starting out in the workforce today, will not retire with the equivalent of $1 million in super,’ he said.
We need to stop focusing on the needs of a privileged few and start talking about how relatively small balances of super can still make a big difference to the quality of life in retirement.
Most people approaching retirement will draw an income that is a combination of both super and the age pension.
The paper found Australians with a retirement balance of $150,000 would receive an additional $163 week from it, on top of the age pension.
The paper also found for a person who spends their entire working life earning about $80,000 per year and stashed about 12 per cent of their wage could expect to retire with about $550,000 in super savings.
This would provide a single homeowner with an adequate retirement income of $31,000 to $40,000 a year depending on the drawdown rate chosen.
Under the new Age Pension asset test and taper rate which begins in 2017, singles approaching retirement with super balances of between $100,000 to $150,000 could expect to receive close to the full pension.
Australian Super chief executive officer Ian Silk said Australians were confused about what they actually needed to have a happy retirement.
The combination of age pension and an income stream taken even from a relatively modest super balance of $100,000 will boost a retirees weekly income by $110, enough to meet the modest retirement standard, he said.
The Association of Superannuation Funds of Australias retirement standard showed a couple aged 65 would need $58,400 each year to live a comfortable lifestyle after retirement.
Singles would need about $42,600.