Is $500,000 in superannuation enough to retire comfortably in 2024? Good question.
Most Australians pay little attention to their superannuation funds and accounts until retirement and a life outside the workforce starts to beckon. But here at the Motley Fool, we believe that everyone with a super fund should nurture and cherish their super. Just as much as our savings outside our super fund.
After all, it's our money, and no one else's – not the government's, and not our super fund's. It also happens to represent our best shot at the comfortable retirement we all want.
The fact that we're asking whether $500,000 in superannuation is enough to retire comfortably in 2024 uncovers another problem. As we looked at last month, the average superannuation balance for someone aged between 60 and 64 in Australia was recently clocked at $361,539. The mean figure was even more disturbing at $183,524.
So most Aussies aren't even on track to reach $500,000 in superannuation by the time they reach retirement age at 67.
But do we really need $500 large in super to retire comfortably in 2024?
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Is $500,000 in superannuation enough to comfortably retire in 2024?
Well, the latest research from the Association of Superannuation Funds of Australia (ASFA) answers this question. AASFA has found that the superannuation balance for a single person retiring at age 67 and seeking a 'comfortable' lifestyle is currently $595,000. For couples, it's a combined $690,000.
This is estimated to be enough to fund $72,148.19 in annual income for a couple or $51,278.30 for a single person until age 84.
For those content with a 'modest' retirement, both singles and couples should have a minimum of $100,000 in super. That's $46,994.28 in annual income for couples and $32,665.66 for singles.
So $500,000 would arguably land you towards the upper area of the modest-comfortable spectrum.
ASFA has done extensive work to define what a comfortable and modest retirement looks like. In concise terms, this mainly highlights differences like the ability to take international holidays, hold private health insurance, enjoy more meals and trips out of the house, and pay for services like Netflix.
These figures assume a few things, too. These include full home ownership, drawing down super over time and an investment earning rate of 6%. They also assume that all participants receive either the full aged pension or at least a part pension. This explains why both singles and couples are assessed to need the same amount for a modest retirement.
So perhaps it's time for a checkup of your own super fund. Hopefully, you'll find your numbers point to something of a comfortable retirement ahead.
