Superannuation may be the key asset for funding the life expenses of someone in retirement. Therefore, the superannuation balance can make a big impact.
We have looked at the average superannuation balance, the average for a 40-year-old and a number of other ages. In this article, we're going to look at the financial picture of an 80-year-old.
It's interesting to look at how much an 80-year-old may have in their superannuation balance because superannuation was only introduced in Australia in July 1992. Hence, people in their 80s haven't had a full lifetime of working whilst it has been applicable.
The 80s are an important time of life, and it may be very useful to have a larger superannuation balance for necessary (or desired) costs such as healthcare expenditures, bills and holidays.
What's the average superannuation balance at age 80?
Based on the Australian Taxation Office (ATO) Taxation Statistics report for FY21, the average balance for someone aged 80 was $475,422. This figure actually includes everyone aged 75 or more, which is the oldest age group of the ATO statistics.
The median superannuation balance for someone aged 80 (or at least 75) was $171,716.
Why is there such a big difference? The median number is what we can describe as the middle number. If all the people aged at least 75 were in a line based on their superannuation balance, the median number tells us what the person in the middle of the line has.
The average balance includes people with large balances, such as high earners and those who have contributed a large amount to their superannuation.
For example, if we had three people – one with a $100,000 balance, one with $200,000 and one with a $1 million balance, the average would be $433,333 and the median would be $200,000. That's a big difference.
The numbers I've given you are for all Australians. However, there can sometimes be sizeable differences between the amounts for male and female balances.
The average female balance for an 80-year-old was $436,865, while the median superannuation balance was $168,973.
Turning to the male balances, the average balance was $507,556 and the median superannuation balance was $174,179.
What can we learn from these figures?
It seems that the average 80-year-old, or people aged at least 75, have a sizeable nest egg. But is it enough for a comfortable retirement?
According to the Association of Superannuation Funds of Australia, the superannuation balance required to achieve a comfortable retirement at 67 is $690,000 for a couple and $595,000 for a single.
An average couple are probably doing quite well, but the people with a median balance may only have enough for a reasonably modest retirement. A modest financial retirement can still be very fulfilling of course – there's more to life than money and how much we spend on something.
I think it's a good idea to periodically assess your superannuation balance to see the progress made toward a particular retirement goal.
But, keep in mind that the last few years of working will have the biggest effect. A 65-year-old with a $500,000 balance that benefits from a 10% rise of the portfolio would mean they would become a 66-year-old with a $550,000 balance.
There are a variety of things that we can do to ensure a healthy nest egg including adding more to superannuation each year and investing in growth-focused asset classes that can produce better returns over time.
We've seen (ASX) shares beat the return of defensive assets of cash and bonds over the long term.
