Australians Reach Major Superannuation Milestone: Average Balance Tops $172,000

The financial landscape for Australians is showing promising signs as the average superannuation balance surpasses the $172,000 mark for the very first time. However, some individuals are still seeing their retirement savings grow at a slower rate—often described as a “glacial pace.”

A Positive Outlook for Retirement Income

In a recent report from the Association of Superannuation Funds of Australia (ASFA), experts predict a trajectory toward “substantially better retirement incomes” in the years to come. Although the report is based on data from June 2023, it reveals that the average super balance stood at $172,834, derived from detailed analysis of Australian Taxation Office data. Notably, the superannuation guarantee has gradually risen, from 10% to 10.5%, and is currently set at 12%.

According to ASFA CEO Mary Delahunty, robust investment returns coupled with a “maturing” superannuation system should contribute to enhanced balances moving forward.

“Despite some volatile periods in recent years, remember that superannuation is designed as a long-term investment strategy,” Delahunty emphasized.

How Does Your Super Balance Compare?

The report highlights important age brackets that reflect average super balances:

• Ages 60-64: Average balance of $355,451
• Ages 75 and above: Average balance of $492,198

While these figures are impressive, Delahunty points out that examining median values can offer better insight into the financial health of the average Australian.

• For individuals aged 30-34, the median super balance is $38,525.
• Those between 50-54 years have a median balance of $147,857.
• Individuals aged 70-74 show a median balance of $215,009.

Shifting Trends in Retirement Funding

According to the ASFA report, superannuation is increasingly becoming the primary income source for retirees, marking a significant shift away from reliance on the age pension. Delahunty noted that this transformation is a result of decades of consistent contributions:

A 30-year-old today, starting with $30,000 in super and earning a median wage, could retire with approximately $610,000, exceeding the $595,000 needed for a comfortable retirement if they own their home.

This growth has generated around $1 trillion in additional household savings, which would not have been available otherwise.

Addressing the Gaps

While the uptick in average superannuation is encouraging, disparities still exist. Gender disparities play a critical role in retirement savings. For those aged 60-64, men average about $396,000 in superannuation, while women average approximately $313,000.

Encouragingly, the gender gap appears to be narrowing: women now hold 43.6% of total superannuation assets, up from 41.9% five years ago. However, Delahunty acknowledged that this progress is happening slowly, largely due to career breaks for caregiving and the prevalence of part-time work among women.

Geographic factors also influence superannuation balances. For instance, mining towns have higher averages, while more recent urban developments typically show lower balances due to shorter working histories.

Proposed Changes to the Superannuation Landscape

To help narrow the gender gap further, Delahunty announced upcoming changes designed to enhance superannuation for all Australians. These changes include potential superannuation contributions during paid parental leave and the removal of tax on unrealized capital gains, which has been pointed out as a longstanding issue by critics.

Additionally, lower-income Australians will benefit from an increase in their super tax offset from $500 to $810, with expanded eligibility criteria rising from a $37,000 to $45,000 income threshold.

Delahunty advises that early engagement with superannuation is crucial for individuals worried about their financial future:

“Ensure you have only one super account to minimize fees and consider contributing even a small amount weekly, as this can significantly boost your retirement savings over time.”

For example, contributing just $20 a week in one’s twenties could yield tens of thousands in additional retirement savings thanks to compound returns.

Conclusion

While the average superannuation balance reaching $172,000 marks a significant milestone for Australians, it also emphasizes the importance of proactive retirement planning. In an era of evolving financial landscapes, understanding the dynamics of superannuation is crucial for achieving a comfortable retirement living. For personalized advice, it is always prudent to consult with a financial professional.

This article serves as general information and should not be construed as financial advice.