‘Fulfilled its objective': Super changes put millions on track for comfortable retirement
Young Australians are on track for a 'comfortable retirement' thanks to a bump in the superannuation rate.
Nearly 10 million workers will see their superannuation guarantee increase from 11.5 to 12 per cent starting from July 1.
According to the Association of Superannuation Funds (ASFA), this increase means a median 30-year old worker making $75,000 a year will add about $20,000 to their superannuation balance by the time they retire.
This $20,000 increase will mean the median 30-year old will retire with $610,000 in superannuation, above the $53,383 a year or $595,000 they would need for a comfortable retirement.
Couples should fare even better.
ASFA says a couple requires $73,875 a year or $690,000 combined in total to live comfortably in retirement using their super plus age pension top-ups.
The major caveat to these figures for singles and couples is owning your own home by retirement.
ASFA chief executive Mary Delahunty called the bump in superannuation guarantee a major milestone for Australia's retirement system.
'With the super guarantee increase to 12 per cent, we are seeing super fulfil its objective of providing a dignified retirement for ordinary Australians, with today's 30-year-old reaping the rewards of decades of progress in our world-class super system,' she said.
The ASFA breaks down the difference between a modest and comfortable lifestyle into 10 categories.
A comfortable lifestyle includes better health insurance, faster internet, a more expensive car, regular leisure activities and an annual domestic trip as well as one overseas trip every seven years.
CPA Australia superannuation lead Richard Webb said while the increase in the superannuation guaranteed would have a long-term benefit to retirement savings, he warned workers to check their pay slips.
'If your employment contract includes a total remuneration package including super, this could mean less take-home pay at the end of the month,' he said.
'However, for those on award or enterprise agreements, your pay agreement is more likely to be a salary, which means the change will not affect your take-home pay.
'It's a good idea to check with your employer to see how they view the changes and what it means for you, otherwise, you might get a shock if your take-home pay is a little less than expected.'
Retirement more expensive
Despite the median Australian now having enough to retire comfortably, costs are still rising for those who are retired.
These expenses climbed 1.6 per cent in the year to March 31 – a figure still below the consumer price index increase of 2.4 per cent, in part due to rents jumping by 5.5 per cent to the 12 months until March 2025.
Eating was the main contributor to this, with fruit and vegetables rising by 6.6 per cent as well as meats and seafood jumping by 4.3 per cent for the year.
Electricity prices rose sharply in the March quarter, reversing sharp falls over the last six months, as several state-based subsidies came to an end and Commonwealth electricity subsidies had timing issues.
The federal government will add two more quarterly payments of $75 in energy subsidies until the end of 2025.
Ms Delahunty said while retirees were getting some relief from slowing inflation, essential costs remained a concern.
'Australians in retirement are starting to benefit from a slowdown in inflation, but the prices of essentials are still rising. It's a timely reminder that achieving a dignified retirement takes planning, and superannuation plays a critical role in making that possible,' she said.
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