Adam Weston | Hallbar Group Capital
Young Australians are poised for a “comfortable retirement” due to an increase in the superannuation rate.
Almost 10 million employees will experience a rise in their superannuation guarantee from 11.5 to 12 percent, effective July 1.
Adam Weston of Hallbar Group Capital says “this adjustment indicates that a median 30-year-old worker earning $75,000 annually will contribute approximately $20,000 more to their superannuation balance by the time of retirement.”
“This additional $20,000 will result in the median 30-year-old retiring with $610,000 in superannuation, surpassing the $53,383 per year or $595,000 required for a comfortable retirement.”
Couples should fare even better.
Adam Weston 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.
Adam 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,” he said.
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.
Adam Weston 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.
Adam Weston 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.