Superannuation shock as surprising number of Aussies retire with less than $50,000 in worrying pensioner trend

A third of Australians are retiring with less than $50,000 in their superannuation account, new research has found. It’s sparked an urgent warning for Aussies to get on top of their financial position now.

Research by super fund UniSuper found 34 per cent of Aussies aged between 65 and 75 years were retiring with less than $50,000 in super, leaving many overly reliant on the Age Pension. This was based on a survey of 3,851 Aussies in various age groups.

UniSuper private client adviser Derek Gascoigne told Yahoo Finance one of the reasons behind the low balances was that superannuation was only introduced in 1992 and commenced at just 3 per cent, before gradually increasing to the current compulsory 12 per cent.

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“It’s probably been sitting at 9 per cent for most of those people’s careers and it’s only really just been slowly raised to its current level of 12 per cent,” he said.

“So a lot of those people haven’t had full careers where they’ve been receiving the types of contributions that we’re seeing now in the market.”

The maximum age pension for singles is currently $30,646, which falls short of industry benchmarks for both a modest and comfortable lifestyle.

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The Association of Superannuation Funds of Australia’s (ASFA) latest budgets found a single homeowner would need $34,522 a year for a modest lifestyle and $53,289 for a comfortable lifestyle.

Gascoigne said this meant many people would “only barely just meet” that modest lifestyle mark if they had about $50,000 in superannuation, plus received the age pension.

“That $4,000 gap can be met by those savings, but it might not be sustainable for a very long time. It might only be in the medium term that they can supplement the age pension,” he said.

“But the issue is, without that additional buffer of retirement savings, how’s one going to be able to meet future unexpected costs down the track?”

It’s worth noting that the average superannuation balance, as reported by the Australian Taxation Office, is higher.

Its latest data showed the median super balance for someone aged 65 to 69 was $208,143, while the median balance for someone in the 70 to 74 age bracket was $215,009.

This would still fall short of ASFA’s standard for a comfortable retirement, which is $595,000 for a single, but would meet the modest standard of $100,000.

For older Aussies who are worried about their superannuation balance, Gascoigne said there were options available.

“It’s not about just looking at what you’ve saved and saying, well, that’s it. It’s actually saying, What else can I leverage to give myself a better lifestyle?” he said.

If you can’t add more to your superannuation fund, Gascoigne said the next step was to think about how you structured your super and moving it from the accumulation into the pension phase.

“One, there are tax benefits from moving the money into the pension phase that help to add to the longevity of the capital,” he said.

“The second thing would be to have a regular income being discharged back to you. [That] can assist with fiscal discipline. It gives structure to drawing on your capital and emulates the type of experience that most people would have had during their working life.”

It’s also worth looking at government support available, such as the ability to work and not have it impact your age pension through the work bonus, and concession cards.

Downsizing could be another option to release capital for your retirement, Gascoigne said. Another option for homeowners is the home equity access scheme, which allows you to boost your age pension up to 150 per cent of the maximum pension rate.

It’s worth contacting your super fund or your financial adviser to see what your options are.

“Someone who is licensed to give advice [can] alert people to the existence of these types of schemes and also recommend as to whether or not they’re appropriate or not to pursue, and demonstrate what difference they are going to make,” Gascoigne said.

“Having a low retirement balance doesn’t necessarily mean having a bad retirement.”

For people who are not yet in the retirement stage, Gascoigne said it was worth considering making extra contributions. Checking your super fund, including the fees, investment option and insurance coverage, is also important.

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