Once you reach your late-60s, your superannuation should be at the forefront of your mind. After all, retirement is only around the corner.
By this point in your life, you should know exactly how much superannuation you have and what you need to be able to have the type of retirement you want.
Here's a breakdown of the average superannuation balance of Aussies aged 66. How does yours compare?
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What is the average superannuation balance at age 66 in Australia?
According to Rest Super, the average superannuation balance for Australian men aged 65-69 is $448,518, and for women it is $392,274.
If your superannuation balance is on track with the rest of the population, that's great news. But it doesn't mean you have enough to live the retirement lifestyle you want.
But, how much superannuation do I need to have at age 66?
According to the latest ASFA Retirement Standard, the benchmark for a comfortable retirement has just climbed higher.
Australians now need $54,840 a year, or $77,375 a year for a couple.
To support that level of spending, ASFA estimates you'll need a super balance of roughly $630,000 as a single and $730,000 as a couple by the age of 67.
The figures also assume you own your home outright and that you're receiving the age pension.
In fact, in order to reach that number, ASFA calculates that at the age of 66, for a comfortable retirement, Australians should have a current superannuation balance close to $618,500.
That's significantly higher than the average balances for Australians aged 65-69.
Why is the average Australian so far behind on their super?
Unfortunately, there are a multitude of reasons.
It's possible to access your super early in very limited circumstances, including to pay certain expenses on compassionate grounds, as well as terminal illness, incapacity, and severe financial hardship.
For example, there was an uptick in Aussies accessing their super early in the COVID-19 pandemic, driven by soaring living costs, sky-high inflation, and widespread lockdowns that caused significant income losses.
Between 20 April 2020 and 31 December 2020 alone, the ATO received 4.78 million applications for early-release of superannuation, totalling $39.2 billion.
Whatever the reason for accessing your superannuation early, removing funds severely affects long-term compounding growth and lowers balances in the long term.
At the same time, economic uncertainty and high cost-of-living also mean that individuals have severely curbed the amount of voluntary contributions going into super fund accounts.
High fees and poor performance also eat into retirement savings. Meanwhile, sticking with an underperforming fund or default option is a mistake that can cost your super balance over time.
Default superannuation investment options are generally designed to benefit a range of investors, but what is considered balanced for one person might not apply to the next.
Growth assets on the S&P/ASX 200 Index (ASX: XJO) might be more appropriate for Aussies with time to ride out any market fluctuations, but those closer to retirement might be more suited to stable assets that can weather a last-minute share market crash.
