The often repeated claim that Australians now need a million dollars in their superannuation account if they wish to enjoy a comfortable lifestyle has been challenged by The Australian Institute of Superannuation Trustees. This is one of the major organisations in the Superannuation Industry and they have recently launched a paper to support their claim that most people can live comfortably on far more modest retirement accounts.
Because this issue is of considerable interest to many people approaching or in retirement, we are reproducing their media release here:
Releasing a paper entitled ‘Busting the $ 1million retirement myth’, AIST CEO Tom Garcia said “Recent claims that super balances of $1 million or more were needed for a comfortable retirement were causing unnecessary fear and concern among many older Australians approaching retirement.
“It’s time to get real about super and ensure all Australians have a far better understanding of the sort of income they can expect in retirement,” Mr Garcia said. “Super doesn’t exist in a vacuum. Most people approaching retirement will draw an income that is a combination of both super and the Age Pension.”
Mr Garcia said that all too often commentators ignored the role that the Age Pension played and would continue to play in to boosting retirement income.
“The reality is that most Australians – including most of those starting out in the workforce today – will not retire with the equivalent of $ 1 million in super. We need to stop focusing on the needs of a privileged few and start talking about how relatively small balances of super can still make a big difference to the quality of life in retirement.”
AIST’s paper shows that a super retirement balance of $150,000, for example, delivers an additional $163 week on top of the Age Pension – a 38 per cent increase. Meanwhile a worker on the median income of $55,000 can expect to retire with a tax-free retirement income of $34,000 – which is 79 per cent of his or her take home pay.
“The key point for people to appreciate is that even relatively modest super balances can make a meaningful contribution to an adequate retirement income when combined with the Age Pension”.