Pre-retiree Super Balances Dangerously Low
One-third of Australians aged between 50 and 70 had less than $50,000 in their superannuation, according to new research from MLC. Statistics released by the group revealed 33 per cent of those in that age group had a super balance of less than $50,000, falling well short of the $545,000 needed for a single person to comfortably retire. A further 43 per cent of those aged between 50 and 70 had less than $100,000 in their super. MLC general manager of superannuation customer experience Lara Bourguignon told financialobserver a range of factors had led to the shortfall, particularly the fact baby boomers as a generation had not benefited from super guarantee contributions for the duration of their working life. “This means they have not seen the full potential of compulsory superannuation and have had to rely largely on the likes of voluntary contributions to build their superannuation position,” Bourguignon said. However, she said it was not too late for pre-retirees to take action on their wealth position by salary sacrificing, increasing contributions and understanding their pension options to overcome the urge to withdraw super as a lump sum at retirement.
“By putting in a plan and adopting strategies while still in the workforce, Australians can boost their savings before retirement and plan for the next five to 10 years,” she said. “Australia has a high level of poverty among retirees and we believe that super is one of the greatest tools we have to change this.” Half of the respondents believed their current lifestyle would be negatively affected in retirement, however, she said every retiree was different and balance amounts were less important than individuals feeling confident.
Pre-retirees also appeared to be disengaged with their super, with over 30 per cent of those with less than $100,000 in their super admitting they never checked their balance. Bourguignon said the reasons for that could be that people had focused on building their wealth through property rather than super or they had given up building their super balance as they did not believe they would amass a significant enough amount. “Many in this demographic may have benefited from the rise in house prices in Australia and their net wealth may be significantly more than what’s in super,” she said.