The debate over retirement savings in Australia is intensifying, with Treasurer Jim Chalmers declaring the upcoming federal election a "referendum on superannuation." This comes as new figures reveal the amount Australians need for a comfortable retirement, alongside calls from some political figures to allow early access to superannuation funds to alleviate cost-of-living pressures.
The Association of Superannuation Funds of Australia (ASFA) reports that the average superannuation balance has reached a record high, with fewer retirees relying on the Centrelink age pension. According to ASFA's latest report, a single homeowner would need at least $630,000 in superannuation for a comfortable retirement, while couples would require a combined $730,000. For individuals, the projected need ranges from $70,500 for a 30-year-old to $496,500 for a 60-year-old. The current estimated annual cost of a comfortable retirement is $55,923.
ASFA CEO Mary Delahunty attributed the growth in account balances to the increasing superannuation guarantee and strong, sustained investment returns. "As more people reach retirement having had the benefit of double-digit compulsory super for most of their lives, we'll see the system come to full maturity," Delahunty stated. She also cautioned against legislation allowing early access to super, warning it could lead to significant tax bills for individuals and increased reliance on the age pension, burdening future taxpayers. "Super isn't a pot of money to be used to fix other problems like housing affordability and cost of living," Delahunty said.
Despite these warnings, One Nation leader Pauline Hanson has criticized the current system as "broken" and advocated for early access to retirement funds. Liberal frontbencher Andrew Bragg has also called for the abolition of compulsory super, arguing it has not significantly reduced pension dependency. Treasurer Chalmers, however, echoed concerns about early access, warning it has the potential to "absolutely decimate the retirement income of millions of Australian workers." He emphasized the importance of compounding interest over time for Australians to access adequate retirement incomes after a lifetime of work.
Data indicates a positive trend in retirement savings. Almost five in ten Australians aged 60-64 currently retire with sufficient savings to meet ASFA's comfortable retirement standard, a figure projected to rise. Concurrently, the proportion of those over 95 receiving a full or partial Age Pension has decreased from 70% in 2012 to around 56%.
A recent survey by Finder indicated that 24% of Australians have withdrawn funds from their super before retirement, with medical expenses being the most common reason. The majority of those surveyed did not regret their decision. Current regulations permit early withdrawal from superannuation only under specific circumstances, such as severe financial hardship, terminal illness, or compassionate grounds.