Super boost shunts millennials into comfortable retirement, super fund says
The milestone comes from analysis by the Association of Superannuation Funds of Australia (ASFA), and was down to mandatory 12 per cent superannuation payments becoming a reality.
'This is a major milestone in Australia's retirement system,' ASFA chief executive Mary Delahunty said.
'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-olds reaping the rewards of decades of progress in our world-class super system.'
From July 1, workers' superannuation guarantee rate increased from 11.5 per cent to 12 per cent, meaning employers pay 12 per cent equivalent amount of your earnings into super.
Unpaid super is a concern in many casualised industries.
The bump to 12 per cent tips today's 30-year-olds into a comfortable retirement, the Association of Superannuation Funds of Australia modelling says.
The increase means about an extra $20,000 come retirement time.
The test-case 30-year-old needs to be on at least the median wage though, which is about $75,000. The average Australian wage is $102,741.
'With the 12 per cent super guarantee coming in, we can now say that the system foundations are cemented for young, working people to have a comfortable retirement,' Ms Delahunty said.
'It's a moment all Australians should be proud of.'
A comfortable retirement means being able to pay for health insurance, a decent car, phone and internet, regular leisure activities, an annual domestic holiday and an international holiday every seven years.
The amount needed to tick these boxes is $595,000 as a single homeowner and $690,000 combined for a homeowning couple.
A retiring renter needs an extra 30 per cent.
As well as being positive news for Australians only a decade or two into their working lives, the super guarantee increase to 12 per cent has also been heralded as a win for women.
Modelling on the change, done by super fund HESTA, projects the increased payments will enhance the stark difference between younger women and women retiring now.
Under HESTA's modelling, a woman starting her career in 2025 was now projected to have $712,000 of super when she retired; $411,000 more than the average female retiring this year.
At the moment, the average Australian male aged in his early 60s has $395,000 in super, versus $313,360 for women.
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