The Australian Institute of Superannuation Trustees is calling for a “super reality check” to ensure Australians have a better understanding of the level of income they can expect in retirement.
In a report released yesterday, AIST said commentary about superannuation balances and the adequacy of retirement incomes needs to be more “informed and realistic”.
“There is far too much focus on the size of super balances at retirement and not enough on the actual incomes delivered by our retirement income system,” the report said.
“Key factors that work to significantly boost the income for most retirees – the age pension, the tax-free status of super in retirement and the fact that super is designed to fund income in retirement and not for estate planning purposes – are all too often ignored.”
AIST noted that most Australian workers nearing retirement are likely to have close to $100,000 in superannuation. Further, the average retirement “nest egg” for a full-time worker is expected to be in the order of $550,000 in today’s dollars by 2060.
“As our modelling has shown, $550,000 will deliver adequate retirement incomes for the vast majority of retiring Australians. And even the modest superannuation balances most workers approaching retirement have today can provide a reasonable retirement income when combined with the indexed age pension,” AIST stated.
“We can do without the feverish scaremongering that $1 million of super isn’t enough and that the age pension is unaffordable and can’t be relied upon. If the debate about super is to be meaningful, we need less focus on the fears of a privileged few and more on what is relevant to most Australians.”
AIST also said that retirees relying on both the pension and super doesn’t mean that super “isn’t doing the job it set out to do”.
“In fact, the super system is functioning as it was intended to, by boosting retirement incomes while keeping the cost of public pensions sustainable,” AIST stated.