At age 50, your focus should be on building your superannuation to a level where you have enough money to retire comfortably.
After all, the difference between a comfortable and a modest retirement is the difference between living a good retirement lifestyle and getting by on a little more than the Age Pension payment.
Here's a breakdown of what a comfortable retirement will cost you, and how much you need in your superannuation right now to meet that figure.
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The cost of a comfortable retirement
According to data from the Association of Superannuation Funds of Australia (ASFA), a comfortable retirement will cost around $54,840 per year for individuals and $77,375 per year for couples.
In order to achieve a comfortable retirement, ASFA also calculates that a couple will need a superannuation balance of $730,000 and a single person will need $630,000.
These figures assume that you retire at age 67 and own your home outright.
They also assume that, at retirement, Australians will draw down all their capital and receive a part Age Pension.
How much superannuation should I have at age 50 to be on track to reach that goal?
For a comfortable retirement, your current superannuation balance should be around $313,500 at age 50.
The concerning thing is, the average superannuation balance for a 50 to 54-year-old male is $254,071, and for a female, it's just $190,175.
How does your balance compare?
Falling behind? Here are a few tips to catch up before it's too late
While it might be frightening to think your superannuation is below what is needed to fund a comfortable retirement, or even possibly below the average 50-year-old, there are a few things you can do to help.
Keep in mind that if you retire at the average age of 65, or even later, then you still have another 15 (or more) years to go before your retirement years are upon you. That's quite a lot of time for your investments to grow.
The first, and most important, thing to do is to review your superannuation setup and performance.
It's important to make sure your super fund is performing well. The difference between a top-performing fund and one that is underperforming a benchmark such as the S&P/ASX 200 Index (ASX: XJO) can be the difference between meeting your superannuation balance goal and missing it entirely.
Also, 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.
Then, the easiest way to boost your superannuation balance is to make extra concessional or non-concessional contributions, whether this is salary sacrificing or after-tax payments (within your annual limits).
If you don't currently have the spare funds to add money yourself, you can look into applicable government initiatives. 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.
