Millennials… is your retirement on track?

There’s one thing for certain, we all have the same amount of time each day. How is it then that some people seem to accomplish more, sometimes even while doing less, in their lives? You need to focus on working smarter.

Like generations before them, many are now buying, or at least trying to buy, homes and starting families of their own. And with this, the stark reality is that their retirement is looming just around the corner.

For all too many, planning for their retirement is just something they don’t even think about. But the reality is that the sooner you start ‘mapping’ or preparing for your retirement, the better off you will be.

How much is ‘enough’, is different for every individual. Based on Association of Superannuation Funds Australia (ASFA’s) figures for a ‘comfortable retirement’, the table below suggests that on average, there’s a potential shortfall in today’s super balances to be on track for a ‘comfortable retirement’ and shows where your super balance should be based on the ASFA recommended figures for a ‘comfortable retirement’ at your age today. These recommended super balances have been calculated (April 2022) using the ASFA Super Guru Super Balance Detective Calculator1, averaged across different age groups.

ASFA’s view on what ‘should’ your average super balance be today:

Age Today’s super average balance2 Recommended super balance today for ASFA’s ‘comfortable retirement’3 Gap
25 – 29 $23,474 $31,200 -$7,726
30 – 34 $46,708 $68,800 -$22,092
35 – 39 $75,167 $112,200 -$37,033
40 – 44 $106,900 $163,800 -$56,900

The Association of Superannuation Funds of Australia’s (ASFA) estimates how much money you may need for your retirement for either a ‘comfortable’ or ‘modest’ retirement. The estimated figures are based on your lifestyle, including multiple activities and other expenses like insurance, and spend on things like cars, holidays and household items. For more information and detail, please read the ASFA Retirement Standard. Another way you could estimate what you may need in retirement is based on the Retirement Income Review – Final Report, which was released by The Australian Government’s Treasury Department on 20 November 2020. This report refers to a general retirement income target of around two-thirds (65 – 75%) of your pre-retirement income for each year of your retirement instead of using the ASFA Retirement Standard. You should consider which retirement target may be more appropriate for your circumstances4.

In order to help bridge this shortfall, you could look at contributing at least 15 per cent of your gross salary, including the current 10.5% (and annually increasing – see table below) compulsory super guarantee contribution, to superannuation each year to boost your chances of achieving a secure retirement.

Financial Year Superannuation guarantee rate
1 July 2022 – 30 June 2023 10.5% (actual)
1 July 2023 – 30 June 2024 11% (proposed)
1 July 2024 – 30 June 2025 11.5% (proposed)
1 July 2025 – 30 June 2026 and onwards 12% (proposed)


Case Study

This seems a pipe dream for Marion, who is 29 and earns $95,000 a year as a successful professional accountant. While her employer contributes 10.5% of her income to super, she has less than $100,000 in super, and is more focused on boosting her non-super savings of $75,000, so she can buy a small apartment. She is not alone.

Most millennials, burdened by HECS debts and increasingly casual employment arrangements, will find the need to boost their super contributions a challenge. This is even more so as many millennials, like Marion, are also struggling to save a deposit for an ever-more expensive home of their own.

They know they will live longer than previous generations and that health and living costs will be much greater for them in retirement, while social security entitlements will be much less than what their grandparents received.

Nonetheless, when asked, millennials want to retire earlier than previous generations and are looking for a different type of retirement. One where they can travel more while still enjoying doing so and keep working on a casual part-time basis, but only if they enjoy the work.

All of this means that amongst all the competing demands on their time and money, superannuation has to become part of the landscape of Neverland.

For Marion, it has meant searching for a better superannuation fund with lower fees and better investment options, while scaling back her plans to buy an apartment and perhaps relying more on the Bank of Mum and Dad to help her do so.

What you can do

The sooner you take control of your superannuation, the better. The first step is to look at consolidating any multiple super accounts into one (being aware of any insurance considerations first) and then, wherever possible, boost your contributions to around 15%. Then you can leave compound interest to work its magic and, like a snowball rolling down a hillside, build the balance within your super.

You can work closely with a qualified financial adviser to help you ensure your superannuation stays on track so you can achieve the best possible outcomes when you do start thinking seriously about retiring.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

2 “Experience to date with the early release of superannuation.” The Association of Superannuation Funds of Australia (ASFA).

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