The goal for most of us is to save enough in our superannuation such that we can fund a relatively comfortable retirement.
Whether that occurs at age 60, when we can access our superannuation, or later depends on various factors, but the amount of superannuation is, of course, important.
This begs the question: how much do you need to fund your retirement?
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Australian superannuation amounts coming up short
It's instructive to look at the statistics on how much superannuation Australians currently have.
At the moment, for men aged 60-64 the average amount is $395,852, while for women the amount comes in at $313,360.
For those aged 65-69 the numbers come in at $448,518 and $392, 274, with all of these figures calculated by the Association of Superannuation Funds of Australia (ASFA).
Meanwhile, ASFA has calculated that to have a comfortable retirement, using superannuation and a part pension, and assuming you own your own home, couples will need $730,000 in super while singles will need $630,000.
How much passive income will superannuation generate?
Now let's look at what those aged 60-64 could expect to earn from their superannuation in passive income.
If a retiree had $395,852 in superannuation and earned 10% on their investments (a lofty sum to assume on a yearly basis), they would earn $39,585. This is well below the $55,923 per year which ASFA says would afford a comfortable retirement.
If they earned just 5%, this figure would drop to $19,792.
What this tells us is that many people do not have enough in their superannuation to sole-fund their lifestyle.
So, what can you do to prepare if you think your superannuation needs a top-up?
Strategies to boost your superannuation balance
Extra contributions can be made to superannuation in the form of concessional and non-concessional contributions.
Concessional contributions are taxed at just 15% and include money contributed by your employer, salary sacrifice contributions, and extra contributions you make up to a cap of $32,500.
If funds permit, and your superannuation balance was less than $500,000 in the last financial year, you can also carry forward any unused concessional contribution cap amounts from the previous five financial years.
The amount you are able to contribute in this way can be found in your myGov account.
A notice of intent to claim must be lodged with your super fund for concessional contributions so they know to deduct the 15% tax from the amount.
It is also possible to make non-concessional contributions up to an amount of $130,000, and it is also possible to contribute more than this amount using the bring forward rule.
