Average superannuation balance at age 60, versus what you actually need to retire comfortably

In Australia, many government or association estimates around retirement are based on the understanding that you'll retire at age 67. 

By this point, you're able to access your superannuation (from age 65) regardless of whether you've stopped working, and eligible Australians can receive Age Pension payments (from age 67).

But did you know that you can actually retire and access your superannuation a lot earlier? 

At age 60, you're officially at preservation age. Which means if you've ceased working, you're eligible to start your retirement and begin drawing down on your superannuation balance.

Why wait another five to seven years if you don't need to?

The only catch is that you'll need to ensure you have enough in your super to fund a comfortable retirement lifestyle from age 60.

Let's investigate what retiring at age 60 might look like. You'll need to know the cost of retirement, how much the average Aussie has at the same age, and how far apart those two figures are.

What is a comfortable retirement?

The Association of Superannuation Funds of Australia (ASFA) splits retirement into two broad categories: comfortable and modest.

A comfortable retirement is defined as one that enables retirees to maintain a good standard of living well beyond the age pension. It budgets for expenses beyond a modest retirement, including top-tier private health insurance and regular leisure activities. It allocates funds for home repairs or renovations, and perhaps even an annual holiday.

Meanwhile, a modest retirement is defined as being able to cover expenses just slightly above what the full Centrelink Age Pension would provide from age 67.

How much will a comfortable retirement cost?

According to ASFA, a comfortable retirement is expected to cost roughly $55,923 per year for single Australians. A couple living together can expect to spend around $78,566 per year combined.

In order to fund a comfortable retirement, ASFA calculates that at age 67, single Australians will need around $630,000. Meanwhile, couples will need a superannuation balance of around $730,000.

But the catch is that these figures assume you'll be retiring at age 67. The calculation also assumes you will only need to fund around 10 years of retirement, will be eligible to receive a part Age Pension, and you own your home in full.

Which means, at age 60, you'll be looking at very different figures.

I want to start my retirement at age 60. How much superannuation do I need?

You can expect your annual costs to be around the same: $55,923 per year for single Australians and $78,566 per year combined for a couple living together.

But you'll need to fund an additional seven years, so you'll need more in your superannuation.

I've done a quick calculation using ASFA's figures to work out the amount you actually need in your superannuation to retire at age 60 and maintain the same quality of life.

At age 60, singles will need to have closer to $1 million in their superannuation. Meanwhile, couples will need a combined balance of around $1.3 million at age 60. 

These figures assume you'll need to fund the additional seven years of retirement between the ages of 60 and 67.

If you don't own your home outright, you'll also need to consider how you'll pay your mortgage or rent.

So, how does this compare with the average superannuation balance of Aussies the same age?

Again, according to ASFA data, the average male aged 60-64 has $395,852 and the average female the same age has just $313,360.

Concerningly, these aren't even half the balance needed at the same age to retire comfortably. Which means the average Australian is already falling far behind when it comes to their superannuation.

How does yours compare?