Working out whether your superannuation is on track depends entirely on your current age and what type of retirement you're aiming for.
A comfortable retirement, which is defined as allowing retirees to maintain a good standard of living, is expected to cost approximately $54,840 per year for individuals and $77,375 per year for couples.
To support that retirement lifestyle, ASFA estimates that Australians need a super balance of roughly $630,000 as a single and $730,000 as a couple by age 67.
The figures also assume you own your home outright and that you're receiving the age pension.
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Is my superannuation on track?
Using ASFA's calculator, I've crunched the numbers and worked out what superannuation balance you need to stay on track for a comfortable retirement.
At age 40, you should have close to $178,000 in superannuation. This needs to climb to $239,000 by age 45.
At age 50, you should have close to $313,500 in superannuation and by age 55, it should be closer to $399,000 in superannuation.
At age 60, you should have close to $496,500 in superannuation. This needs to hike to $604,500 in superannuation by age 65 in order to remain on track.
Help! I'm behind. What do I do now?
If your superannuation balance is lower than what you should have at your age, you're not alone. And there are things you can do to catch up before it's too late.
The easiest way to get back on track is by reviewing your current superannuation fund. Is your fund performing well and in line with market expectations or a benchmark such as the S&P/ASX 200 Index (ASX: XJO)? The difference between a poor-performing fund and a top-performing one can be the difference between scraping by in retirement and living comfortably.
Then check that your fund's risk appetite aligns with your own. Putting your money into the wrong type of fund can quickly chip away at your balance. It makes sense to be conservative later on in life when you're approaching retirement, but being too conservative too early means you'll lose out on the potential for more growth.
Next, you need to add extra concessional or non-concessional contributions, whether by salary sacrificing or after-tax contributions (within your annual limits). There's no sense adding money to your superannuation fund if it means you'll struggle to make it to payday. But the power of compounding returns means that the more money you can invest when you're younger, the more impact it will have on your final balance.
Lastly, take advantage of any government initiatives available to you. There's the downsizer contributions rule, the bring-forward rule, the government co-contribution rule, and many others. These can help boost your balance just a little bit further.
