How Much Super Should I Have at 60?

Superannuation is Australia’s national retirement savings system, designed to help individuals accumulate wealth throughout their working lives. Understanding the status of one’s superannuation balance at age 60 is an important step in planning for a financially secure retirement. This assessment provides clarity on whether current savings align with future lifestyle aspirations. While specific figures and rules discussed here pertain to Australia, the principles of evaluating retirement savings and making informed decisions are universal.

Understanding Superannuation Benchmarks at 60

Industry bodies often provide general benchmarks to illustrate the retirement savings balances that might be needed for different retirement lifestyles. For example, in Australia, the Association of Superannuation Funds of Australia (ASFA) Retirement Standard suggests figures for individuals aiming for either a modest or comfortable retirement. These benchmarks typically assume that retirees will draw down their capital and may receive government support.

A modest retirement generally covers basic living costs with limited discretionary spending. A comfortable retirement allows for more flexibility and discretionary spending. It is important to recognize that these benchmarks are general guidelines and vary significantly by country and individual circumstances. Average balances for individuals in a specific age group often indicate that many may have balances lower than comfortable retirement benchmarks.

Calculating Your Personal Retirement Income Needs

Moving beyond general benchmarks, assessing personal retirement income needs involves a detailed look at individual circumstances and desired lifestyle. Begin by envisioning the kind of retirement you seek, whether it is modest, comfortable, or more affluent, as this directly influences financial requirements. Consider all anticipated living expenses, including housing costs, utilities, groceries, healthcare, transportation, and leisure activities. Healthcare costs, for example, can become a significant expense in later life.

Beyond daily expenditures, factor in larger occasional costs such as travel, home renovations, or support for family members. Next, identify other potential sources of retirement income that might supplement your primary retirement savings. This includes any eligibility for government benefits, income from other investments, or earnings from part-time work if you plan to continue working. Government benefits, for example, are often means-tested and can provide a valuable supplement for eligible individuals.

Consider your life expectancy and how long your savings will need to support your desired lifestyle. Financial calculators can help translate these annual income requirements into the total savings balance needed to sustain them, taking into account potential investment returns and planned drawdowns. A comprehensive assessment allows for a more accurate determination of the savings balance necessary to fund your specific retirement vision.

Strategies for Boosting Your Super

Individuals approaching age 60 who identify a need to increase their retirement savings balance have several avenues to consider. Making additional pre-tax contributions can be an effective strategy. This often includes salary sacrifice arrangements with an employer or making personal contributions for which a tax deduction is claimed. Many retirement systems have annual contribution limits, and some allow for unused portions of previous years’ limits to be carried forward, often with specific balance thresholds.

After-tax contributions also offer a way to boost savings. These contributions may also have annual limits. Some systems allow for larger, one-time contributions that effectively bring forward future years’ contribution allowances, typically subject to age and total balance thresholds.

Government co-contribution schemes can provide an additional boost for eligible low to middle-income earners in some countries. These schemes may match personal contributions up to a certain amount, often based on income levels. Reviewing investment options within your retirement fund, such as assessing your risk profile and ensuring diversification, can also impact growth. Seeking financial advice can provide personalized strategies tailored to individual circumstances and goals.

Accessing and Managing Your Superannuation

Reaching age 60 often significantly impacts how retirement savings can be accessed and managed. In many systems, including Australia’s superannuation, there is a “preservation age,” which is the earliest age at which benefits can generally be accessed. Once this age is reached and a condition of release is met, such as retirement or ceasing an employment arrangement, savings become accessible.

There are several ways to access retirement savings at or after this age. One option, exemplified by Australia’s Transition to Retirement (TTR) income stream, allows individuals who are still working to access a regular income from their savings. Such income streams often have yearly maximum and minimum payment requirements. For those aged 60 or over, payments from these types of income streams may be tax-free, depending on the system.

Upon full retirement, or reaching a certain age even if still working, individuals can often commence an account-based pension or similar income stream. This involves transferring a portion or all of your savings balance into an account designed for regular, flexible payments. These accounts also typically have minimum annual payment rates, which vary by age. Alternatively, a lump sum withdrawal allows for accessing some or all of the savings balance as a single payment. For individuals aged 60 or over, both lump sum withdrawals and income payments from a taxed retirement fund are generally tax-free in systems like superannuation. Moving from an accumulation phase to a pension phase often means savings continue to be invested, but earnings within the pension account are typically tax-free.