The sad fact about most retirement savings predictions is how woefully out of touch they are with reality.

There’s a reason for this.

Firstly the people offering these projections are generally not living in retirement. Most are still working, earning more than $100,000 a year in salary and quite likely to achieve that mythical $1 million in retirement savings. Let’s say they are theoreticians.

And then there’s the vast bulk of Australian retirees, probably feeling like they are on another planet, but in fact the ones with real lived experience of retirement. Let’s call them practitioners. And most know a thing or two about realistic retirement targets.

This discussion came to a head last week with the release of a new retirement savings target by Super Consumers Australia (SCA).

This organisation is a not-for-profit arm of the consumer advocacy group Choice.

Here are SCA’s new targets:

savings targets 55-59

SCA’s targets for low and medium expenditure in retirement (singles $34,000, $44,000 respectively per annum, couples $48,000 and $64,000) will require lower savings than the previous most commonly used benchmark offered by the Association of Super Funds Australia (ASFA). Also known as the ‘retirement standard’, ASFA believes that those wanting a ‘comfortable’ lifestyle at retirement will need to save $545,000 if single and $640,000 if partnered.

Here’s our comparison of funds needed for medium or comfortable lifestyles as offered by SCA and ASFA:

SCA ‘medium’ lifestyle ASFA ‘comfortable’ lifestyle (ASFA) Median super balances age 55-59
Single savings needed $301,000 $545,000 Male $162,337Female $109,639
Singles’ annual expenditure $44,000 $46,494
Couple savings needed $402,000 $640,000 Male $162,337Female $109,639
Couples’ annual expenditure $64,000 $65,445

We’ve added the median superannuation balances column on the right as a reality check.

Put simply, most people do not retire with super balances of $300,000 or $400,000 let alone $545,000 or $640,000.

The median super balances at ages 55-59 from ASFA’s own research show male balances sitting around $162,000 and females at not quite $110,000.

So it can be very unhelpful to even imply that the above target savings are easily achieved when at best, the current Australian track record is to save only half the suggested amount.

And there’s another major concern about taking these projections too literally. And that is that they are based upon living expenses, on top of assumed pension eligibility, and the belief that you are living in a home without a mortgage.

There are a lot of assumptions here. In fact, a rapidly increasing number of retirees are entering retirement with a mortgage – 42% of pre-retirees (aged 50-64) are carrying mortgage debt according to the Grattan Institute. Not quite half, but a significant enough number to need to be represented in the above calculations, one would think.

So where does this leave you when you look at your own nest egg and realise you only have about half the amount that the so-called experts say you need?

You are right where you are and that’s okay.

Most ordinary Australians will not achieve these suggested savings targets in the near term. So you are with the pack, so to speak.

The good news is that the Age Pension is a secure, government-guaranteed source of retirement funding which can provide a solid and reliable base for your retirement spending. If you are eligible for an Age Pension you can also earn an extra $7800 per year through the work bonus, without being penalised and will automatically receive a Pension Concession Card (PCC). And you can use the savings that you DO have, to top up your pension so that you are not living hand to mouth, but able to afford some small luxuries along the way.

You can also review your current or future Age Pension entitlements and consider some of the many ways of maximising these benefits, either before retirement when you have most leeway – or after retirement when there are still many ways to mix your savings, your super and your pension income to achieve the optimum result.

It’s helpful to be aware of the current retirement savings benchmarks. But judging yourself against aspirations that are simply unachievable is very disempowering. The team at Retirement Essentials has many proven strategies to help you make the most of every dollar you have today. A consultation with an experienced adviser can answer your questions about ways to use our knowledge to make the most of what you have. When it comes to knowing the rules, there’s support available.

Book an online consultation now and find out your options to maximise your income – and minimise your stress.

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This article is provided by Retirement Essentials Representative Number: 001260855.  We are an authorised representative of SuperEd Pty Ltd ABN 88 118 480 907 AFSL #468859.  This information is not intended as financial product advice, legal advice or taxation advice. It does not take into account your personal situation, goals or needs and you should assess your own financial situation, consider if the information is suitable for you and ensure you read the relevant Product Disclosure Statement (PDS) if you choose to make any changes to your financial situation. It is always advisable to consult a financial adviser before making financial decisions.