How much super do I need to retire?

The average Australian doesn't have enough super to comfortably retire, according to ASFA data.

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Key points

  • If you're nearing retirement, or just planning ahead, you might be wondering how much super you'll need to see out your 'golden years'
  • The amount a person needs will vary depending on things like their lifestyle, finances outside of super, and living situation
  • However, according to ASFA, the average Australian nearing the retirement age doesn't have enough super to fund a comfortable retirement

Ah, retirement. The golden years of a person's life, where free time reigns supreme and financial worries are behind us. That sounds idyllic, but it might not be the reality for many relying on a too-small superannuation balance.

So, how much does one need in the super account to comfortably retire? Let's take a look.

How much super does a comfortable retirement demand?

How much super a person needs to retire varies depending on their lifestyle, living situation, and broader financial position.

However, according to the Association of Superannuation Funds of Australia (ASFA)'s Retirement Standard, it might be more than most have.

It suggests a $690,000 super balance for a couple, or a $595,000 balance for a single person, should provide a comfortable retirement, assuming the age pension will also come into play.

When determining 'comfort', the ASFA looks at a person's ability to afford private health insurance, regular leisure activities, and an annual domestic holiday.

A modest retirement, on the other hand, only demands around $100,000 of super, as well as the age pension.

Meanwhile, the average Australian man in their early 60s has a super balance of around $360,000 while the average Australian woman in their early 60s holds around $289,000 of super, as of June 2019.

How one might grow their retirement wealth

If you're among the majority of Australians worried about not having enough super to retire, take a deep breath. There are plenty of ways to boost the value of your nest egg.

Of course, as an ASX fan, I might suggest you consider investing consistently in shares. As the ASX has historically always gone up, doing so could prove a rewarding way to make your money work for you.

Though, investing in any asset comes with risk. While there are ways to reduce risk, some would-be retirees simply won't be comfortable – or have the time and resources – to invest in the stock market.

Fortunately, diving into The Motley Fool Australia's complete guide on planning for your retirement could help increase your confidence in your financial position.

As could seeking out sound financial advice.

Head of investment relations at financial services provider Findex Matthew Swieconek says:

A financial adviser doesn't only provide guidance on investment strategies that align with your goals and risk tolerance. They provide behavioural coaching, asset allocation research and management and tax savvy planning – areas that DIY investors can often overlook and can add enormous value to wealth creation over time.

Quantifying this, our projections demonstrate the value of advice where Aussies stand to gain 8% to 29% in benefits depending on the age they start.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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