When it comes to your superannuation, one of the most common questions people ask is, How does my super balance compare to others my age? It’s an important question, as understanding how your retirement savings measure up can help you gauge whether you’re on track for a comfortable retirement. But there’s no one-size-fits-all answer. Several factors can affect how your super balance compares to the average for people in your age group.
Average Superannuation Balances by Age
While averages vary depending on the source, super balances across Australia generally follow a similar trend, with younger people having lower balances that grow as they approach retirement. Here’s a general breakdown of average superannuation balances by age:
Under 25: The average super balance for people under 25 is often quite low, with many individuals just starting their careers and contributing smaller amounts.
25–34: In this age range, the average balance typically starts to grow as people begin earning more and increasing their super contributions.
35–44: By now, people often begin accumulating a more substantial balance, with growth reflecting a combination of salary increases, regular contributions, and investment returns.
45–54: As people near their 50s, their super account tends to see a significant increase, especially if they’ve been regularly contributing and benefitting from compound growth.
55–64: For those nearing retirement, super balances may reflect decades of savings and investment, meaning this age group tends to have the highest average super balances.
65+: Once you hit retirement age, your superannuation funds may have decreased as you begin drawing down from it, although some may still have substantial funds depending on their retirement plans.
Is My Super Balance Enough for My Age?
While looking at the averages can give you some perspective, it’s important to remember that everyone’s financial situation is unique. Factors such as income level, employment type, career breaks, and lifestyle choices can all have a significant impact on how much superannuation you have compared to your peers.
If you’re significantly behind the average for your age group, it doesn’t mean you’re out of options — it’s simply a prompt to reassess your strategy and make adjustments as needed.
Is My SMSF Balance Enough for My Age?
While comparing your SMSF balance to others in your age group can offer some perspective, it’s crucial to remember that everyone’s financial situation is unique. The amount in your SMSF will depend on a variety of factors, including:
- – The size of your starting balance
- – Your compulsory and voluntary contributions over time
- – Investment performance
- – Your strategy for diversifying your portfolio
If your balance is below the average for your age group, it’s worth evaluating your contributions and investment strategy. Conversely, if you’re ahead of the average, you might be on track to retire comfortably, but there’s always room to ensure your SMSF is performing optimally.
SMSF Members: Comparing to Others
For SMSF members, comparing your super balance to others involves more than just considering the amount in your account. You also need to understand your investment choices and the fees associated with managing your SMSF. There are a few unique factors SMSF members should be aware of when comparing their super savings to others in their age group:
- – Size of your SMSF: SMSFs are generally more suitable for those with higher super balances, as the fixed costs associated with managing an SMSF can make it less cost-effective for those with smaller balances.
- – Investment goals and strategy: SMSF members have more control over their investment choices. Your strategy should align with your retirement goals and reflect your risk tolerance.
- – Management and compliance costs: Remember to factor in the costs of managing your SMSF when comparing it to others. Higher costs can reduce your overall returns.
- – Regular monitoring: Unlike traditional funds, SMSFs require more active monitoring. Compare the performance of your SMSF investments to industry benchmarks to ensure you’re on track to meet your retirement goals.
SMSFs and Investing in Property
SMSFs provide the flexibility to invest directly in residential or commercial property, which is not available in regular super funds. Many SMSF trustees choose to invest in property to generate regular rental income and capital growth over time. When added to a portfolio of assets, property investments may offer diversification for SMSFs, reducing overall investment risk. However, it’s essential to be mindful of the specific rules governing property investment within an SMSF, such as the prohibition on acquiring property from related parties and the need to ensure any property purchased is used solely for the purpose of building retirement savings. If you’re considering property for your SMSF, make sure it aligns with your overall retirement goals and complies with all relevant regulations.
We’re Here to Help
If you’re considering investing in property within your SMSF, we can help guide you through the borrowing process of SMSF loans. Get in touch today to discuss your options!
