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Our new targets for your super in retirement

Super Consumers Australia has developed new guidelines based on the actual spending of Australians in retirement.

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Last updated: 18 July 2022
Fact-checked

Fact-checked

Checked for accuracy by our qualified fact-checkers and verifiers. Find out more about fact-checking at CHOICE.

Need to know

  • Super Consumers Australia has come up with an independent and realistic set of figures to help people plan for retirement 
  • The new targets suggest that middle-income people will need less for a comfortable retirement than the existing AFSA Retirement Standard suggests

Super Consumers Australia research has found one of the key questions Australians have about their retirement is 'how much will I need'? 

After extensive consultation, we've developed some guidelines, based on the actual spending of retired Australians.

"Among the most important financial questions retirement-planning Australians face is how much they need to save and what income those savings will deliver in retirement," says Super Consumers Australia director Xavier O'Halloran.

"These new retirement targets are designed to help people answer these questions. They provide a solid 'rule of thumb' for what is needed to maintain living standards when you're retired."

Debunking existing information

Representing the superannuation industry, the Association of Super Funds Australia (ASFA) has published their widely-used Retirement Standard, but the expert view is that these standards may be misleading. 

The Productivity Commission said these standards equate to a retirement income that is "more than many people spend before retirement" and that they are "no more than an arbitrary benchmark that should be ignored in policymaking".

Why misleading targets matter

So, why does it matter if the existing financial targets are wrong? The Retirement Income Review (RIR) noted that meeting the ASFA Retirement Standard would require a "substantially lower standard of living during working life" for a middle-income earner. 

In other words, if you're a middle-income earner, you would need to make significant cuts to your current spending to save enough for retirement for the ASFA standard.

The good news

Our targets found middle-income people will need less for a comfortable retirement than the existing AFSA Retirement Standard suggests. 

The RIR's analysis of data from the Household, Income and Labour Dynamics in Australia (HILDA) survey supports this finding. It said that 88% of recent retirees reported being financially satisfied or neutral about their finances.

The fact that most retirees maintain their spending levels and are satisfied with their lifestyle suggests that using actual spending, rather than aspirational targets, is a more useful measure

Similarly, a large majority of retired Australians are happier than they were during their working life. 

The fact that most retirees maintain their spending levels and are satisfied with their lifestyle suggests that using actual spending, rather than aspirational targets, is a more useful measure.

Tough for renters

Many retired renters face income poverty and financial stress in retirement.

We've previously highlighted how rental assistance is insufficient for this growing group of Australians. For this reason, our guidelines don't include targets for retired renters. 

We think that systemic change, such as increased social housing and rent assistance, is more important to this group than aspirational targets.

Independent advice

"I've used (retirement) calculators before, but they are from super funds themselves," says one of the participants in our research. "You always wonder (is) this based on actual people."

A vital point about the targets we have developed here at Super Consumers Australia is that they're independent – they're not from a super fund or an industry group with a vested interest in getting you to contribute more to your super. 

This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with CHOICE to advance and protect the interests of people in the Australian superannuation system.

We care about accuracy. See something that's not quite right in this article? Let us know or read more about fact-checking at CHOICE.

Stock images: Getty unless otherwise stated.