How much super you need for a comfortable retirement now

What does a comfortable retirement now cost?

The cost of a comfortable retirement for homeowners at age 67 has reached a record high, according to the latest quarterly Retirement Standard from the Association of Superannuation Funds of Australia (ASFA).

A comfortable retirement super balance is now $630,000 for singles, up from $595,000. Couples would need a super balance of $730,000, up from $690,000.

On an annual basis, homeowners aged 65 and over now need $77,375 for a comfortable retirement as a couple, and $54,840 for a single.

The lump sums required for a modest retirement have also increased to $110,000 for singles and $120,000 for couples, up from the previous $100,000 for both groups.

Why are retirement costs rising?

ASFA attributed the rise to the age pension not being able to keep pace with retirees' cost of living.

"Retirees' living costs have risen, and support from the age pension has not kept pace with this rise. This means retirees need higher super savings to maintain a comfortable lifestyle," says ASFA chief executive Mary Delahunty.

"Costs in the categories that retirees tend to spend most on have risen faster than general consumer price inflation. So that means even though the age pension is indexed, a greater burden is placed on retirees' personal super savings."

What role do deeming rates play?

The other major factor, ASFA noted, has been the recent increase in deeming rates, the assumed rates of return applied to financial assets when assessing age pension eligibility.

Last week, minister for social services Tanya Plibersek, announced a rise in the lower deeming rate to 1.25% for financial assets under $64,200 for singles and $106,200 for couples. The upper rate will rise to 3.25% for assets over the same thresholds.

"When deeming rates rise, a person's assessed income can increase even if their actual investment returns have not, which can reduce their age pension. This shifts more of a retiree's budget towards reliance on super rather than Centrelink," says Delahunty.

Is there any good news for future retirees?

While Delahunty says the rise in the lump sum amount reflects greater pressures from living expenses on retirees' super savings, the overall picture for retirement outcomes is positive.

She noted Australia's super system continues to generate superior returns on investments for its members.

"The good news is that Australians are reaching retirement with larger super balances than ever before. The super system is working really well, securing Australians' retirements."

A 30-year-old worker with $30,000 in super today and earning $80,000 throughout their career adjusted for inflation is on track to retire with $645,000.

"That's because super funds have delivered exceptional returns in the last few years. The average balanced fund returned 9.9% in 2023, 11.4% in 2024, and 9.3% in 2025. That's cumulative growth of nearly 35% over three years, well ahead of inflation," Delahunty says.

The Superannuation Guarantee has also risen steadily since 2020 and is now at 12%.

This article first appeared on Financial Standard

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