But it will certainly help.
A new report out today suggests that couples could retire comfortably with as little as $500,000 in their accounts. Titled "Busting the $1 million retirement myth", the paper is being released by industry super fund AustralianSuper with the Australian Institute of Superannuation Trustees (AIST). The AIST is the peak body for all non-profit super funds (including corporate, public sector and industry).
But the report has one proviso – that the couple own their own home. If it's in Sydney, then its likely worth more than $1 million anyway – which kind of defeats the purpose of the report.
AustralianSuper chief executive Ian Silk says the report "is in response to some really concerning feedback from our members who are worried and despondent as a result of reading a flurry of reports (like here and here) that they will need more than $1 million in the account to retire. Not only is that out of reach for the vast majority of people, it is simply untrue."
The Association of Superannuation Finds of Australia (ASFA) did some modelling this year which showed that the low-interest-rate environment of today would mean the returns for a couple with $500,000 in their super account would not be enough. ASFA go even further and suggested even $1 million won't be enough to get to its benchmark of $58,000 in retirement income per year for a comfortable living.
Mr Silk reminded retirees that superannuation is part of a three-pronged retirement income system, alongside the aged pension and assets outside of super, such as share portfolios, investment properties and even the family home.
Fairfax Media estimate that less than 5 people in every 1,000 in a pooled super fund have a $1 million balance. The average super payout at retirement is around $160,000, according to the newspaper – but that is for people retiring now – and ignores the fact that superannuation is only a recent invention. In 40 years' time, a typical super payout would probably be worth $500,000 in today's dollars (or more than $1 million in future dollars).
Foolish takeaway
Despite the arguments and toing and froing over the exact amount Australians need, we should be striving to save as much as we can for retirement to lessen our dependence on government handouts to survive post-retirement. Aiming for $1 million seems like a sensible idea and not as far-fetched as many believe, if you invest wisely and early and continue to top up your super savings regularly – as we've outlined in this special report.
