How much super do I need to retire at 60?

Everybody has a different retirement in mind. Some want to travel the world each year, while others want to downsize and spend time with their family and friends, locally. Regardless of the type of retirement you want, it’s important to have a plan as it starts to near.

Doing so helps to develop a good understanding of how much super you might need to retire in your 60s, as well as what to do with it. If it needs a boost, since 1 July 2022, the federal government made it easier to contribute money to your super fund in your 60s, as you can continue to make salary sacrifice and personal contributions to your super without needing to satisfy the ‘work test’ until you turn 75.

Pre-planning helps

Before you retire, it might be good to understand your spending patterns to determine how much you need to get by, or, to work out how much longer you need to work (either full or part-time). 

ASFA estimates people who want a comfortable retirement need $690,000 for a couple, and $595,000 for a single person when they leave work, assuming they also receive a partial age pension from the federal government. For people who are happy to have a modest lifestyle, this figure is $100,000.

To figure out which camp you fall into, take a look at your bank statement and calculate where you spend your money. Go back a number of years to get a really good feel for your finances.

Use our Retirement Lifestyle calculator to estimate the annual income you might need to support a retirement lifestyle you're after. 

Adding a little extra

Making small additional contributions to your super fund can make a difference when you do retire. So if you are able to, it’s a good idea to make voluntary contributions to your fund each year.

From 1 July 2023, you can make up to $27,500 in concessional contributions to your super account each year, which includes the 11 percent your employer is obliged to contribute to your chosen super fund each year and receive a tax benefit. By requesting your employer to make additional salary sacrifice contributions, this may mean the tax you pay could be reduced simply by making an extra voluntary contribution from your ordinary earnings to your super fund each year.

You can also consider contributing money to your super fund from any windfalls you may receive from inheritances or bonuses you receive through work. You don’t necessarily need to add the whole amount from your windfall to your super – although you could. Just be aware adding a portion of these funds to your super balance could make a difference when you retire, although you won’t be able to access the funds until then in most cases. 

If you have paid off your home, you may consider redirecting part of your mortgage repayments to your super account to add to your balance. You may be able to contribute $110,000 to your fund each year on an after-tax basis, as long as your super balance is less than $1.9 million and even contribute up to $330,000 in one year to your fund under the bring forward provisions, as long as your super balance is less than $1.68 million. Other factors may affect your eligibility to make these contributions and speaking to a financial adviser can help ensure you do not contribute more than is allowed.

It is important to note that there are limits to the amount of contributions you can make to super without exceeding your contribution caps. Refer to ato.gov.au for more information.

Business time

If you sell a business you have owned for more than 15 years, you may be able to contribute some of the proceeds from the business’ sale tax-free to your super fund. This is a complex area of the super rules and if you’re in this situation, it’s a good idea to seek independent professional financial advice.

Thinking long term

As you get older, it also becomes important to ensure your estate planning is up to date, especially when it comes to your super. Remember, super is not considered to be an estate asset and you need to make either a binding or non-binding nomination about how you wish your super assets to be treated after your death.

If you make a binding nomination, this gives the trustees exact guidance about what should happen to your super after you die. Typically, these nominations are only valid for three years, so be sure to keep them up to date. But if you make a non-binding nomination, this will only give them a direction about your super. They will have some discretion about what should happen to these funds.

Next: Transition to retirement