Reaching the big 4-0 is a milestone for several reasons. It's often when individuals reflect on the achievements they've made in their lives so far, and also when they set goals for the future.
Essentially, it's the milestone between childhood and retirement. And when you think about retirement, you think about superannuation.
Reaching retirement age might sound exciting, but what if you don't have enough money in your superannuation to fund your lifestyle when the time finally comes?
Here's a rundown of exactly what you need at the age of 40, and how to catch up if you're already behind.
Image source: Getty Images
What is the average superannuation balance at age 40?
There isn't an exact figure for age 40, but according to Rest Super, the average superannuation balance for Australians aged 40-44 is $140,680 for men and $109,209 for women.
Although at the age of 40, it would be safe to assume that something between the figure of the average for the bracket below (35-39) and the figure for 40-44 year olds would be acceptable. For men aged 35-39 the average super balance is $96,112, and for women it's $76,020.
How does yours compare?
What do you need for a comfortable retirement?
According to the latest ASFA Retirement Standard, the benchmark for a comfortable retirement, is just over $54,000 per year for a single person and $76,000 per year for a couple.
To support that level of spending, ASFA estimates you'll need a super balance of roughly $595,000 as a single and $690,000 as a couple by the age of 67.
The figures also assume that you own your own home outright and assume you're receiving the age pension.
For a modest retirement, you'll need around $100,000 more. But if you don't own your own property and will be renting privately in retirement, for that same modest lifestyle you'll need a much higher superannuation balance.
For a renter with a modest lifestyle, which translates to $49,676 a year for singles and $67,125 a year for couples, their superannuation balance should be $340,000 to $385,000 by age 67.
However, unfortunately, the gap between the average Australian superannuation balance, and what is needed to fund retirement, is significant.
How to catch up if your superannuation is behind
The good news is, there are things Australians can do to boost your superannuation balance before it's too late.
You can make extra concessional or non-concessional contributions, whether this is salary sacrificing or after-tax (within your annual limits).
You can take advantage of any government initiatives to match contributions and propel your balance just that little further.
It's important to make sure your super fund is performing well. Even slightly underperforming a benchmark such as the S&P/ASX 200 Index (ASX: XJO) over a long period of time can greatly impact the end balance.
And of course, review your investment strategy to ensure it actually aligns with your retirement goals and risk appetite.
