First appeared in The Australian and the Australian Financial Review 26 May 2017.
Most of us like to think of ourselves as something special. In many cases, we like to think of ourselves as anything but average.
Surveys have shown around 90% of drivers consider themselves above average1. Our views are subjective at best.
When it comes to our superannuation most of us would admit to not having a clue on what’s average and how we compare to other people around us.
There is some comfort in knowing where we sit compared to others who are earning (and perhaps) spending similar amounts to ourselves.
The figures below give you some idea on where you might sit, on average.
Weekly individual earnings - $1,533.10a
Average household net worth - $809,900b
Weekly spend for a couple with 2 kids aged 0-14 years - $1670b
Home owner with mortgage – 36% of Australiansc
Superannuation balance (14-65 years old) - $98,535d
Average balance at retirement - $292,510 for men, $138,154 for womend
Sources: a. Australian Bureau of Statistics Average Weekly Earnings November 2016, b. Australian Bureau of Statistics Household Expenditure Survey 2009-10, c. Australian Bureau of Statistics Survey of Income and Housing 2013-14, d. ASFA Retirement Standard for the September quarter 2016.
Knowing whether you are sitting above or below average might give you comfort or cause for concern. But remember, everyone has different circumstances and priorities. If you find yourself below average, you might want to consider seeking some help if you find you can’t afford what you are spending – particularly if your spending is above average.
No matter where you sit on the statistics, it’s worth taking a second look at your retirement savings. Your balance might not afford the average lifestyle you expect.
Enjoying a standard retirement
Should you go off the averages when it comes to your retirement?
Your cost of living and expenses both in and out of retirement varies based on a range of factors such as where you live, your health, lifestyle expectations and dependents. And these factors might not be set in stone either. Your health can change. You might want to move somewhere else. And so the list goes on.
And if you live an above-average life now, there’s a chance you’ll still want to live an above-average life in retirement too.
BT Financial Group believes that estimating your retirement income needs as being around 65% of your pre-retirement income can be a helpful way to start. For example, to be fully independent of the age pension, a single person approaching retirement on the average income of $75,000 would need at least $810,000 by the time they retire at age 65.
Looking back, that average balance of working Australians and balance at retirement might not look so comfortable when you compare your own needs.
Upgrading from your average retirement
Just as some of us are happy and able to pay for upgrading our movie seats, airline tickets or holiday destinations, there are a range of ways you can tackle your super.
First, talking to a financial adviser about your goals and needs can really help you develop a strategy to suit your situation, goals and needs.
If you decide to make extra contributions to your superannuation, you should be aware rules around contributions.
- Concessional contributions are capped at up to $25,000 per financial year.
- Non-concessional contributions are capped at up to $100,000 per financial year (or up to $300,000 using the three-year bring-forward rule).
- Those with a total superannuation balance of $1.6 million or more (as at the previous 30 June) will not be able to make after-tax contributions to their superannuation.
Need help with your superannuation? Click here to be contacted by a financial adviser or call 132 135 for more information.
This information is current as at 24/05/2017.
This information has been prepared without taking account of your personal objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This information provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
Superannuation is a means of saving for retirement, which is, in part, compulsory. The government has placed restrictions on when you can access your investment held in superannuation. The Government has set caps on the amount of money that you can add to superannuation each year on both a concessional and non-concessional tax basis. There will be tax consequences if you breach these caps. For more detail, speak with a financial adviser or visit the ATO website.
The tax position described is a general statement and is for guidance only. It has not been prepared by a registered tax agent. It does not constitute tax advice and is based on current tax laws and our interpretation. Your individual situation may differ and you should seek independent professional tax advice. For more information, visit the ATO website.
This article may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, no company in the Westpac Group accepts any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material.
These projections are predictive in character. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be affected by inaccurate assumptions or may not take into account known or unknown risks and uncertainties. The actual results actually achieved may differ materially from these projections.
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