Retirement cup still only half full
A new research paper developed by the Association of Superannuation Funds of Australia (ASFA) has reconfirmed the limited retirement lifestyle Australians will lead if they are forced to rely on the age pension.
The research paper, developed by ASFA director of research Ross Clare, argued that compulsory superannuation has made a substantial contribution to lifting many individuals from the limited and low cost lifestyle provided by the age pension towards a modest retirement lifestyle.
The research paper asserts, however, that the superannuation cup is still only half full and that it leaves most workers well short of what they reasonably want and expect in retirement.
“More needs to be done, either through encouragement of voluntary contributions by way of an enhanced co-contribution or other government payment or through the introduction of soft compulsion,” the ASFA paper said.
It said while the age pension would continue to play a role in retirement income, even for those with superannuation, encouraging additional superannuation contributions would be an important contributor to improved retirement lifestyles.
The research paper said contributions of 12 per cent or more of salary were required by a household with a single wage earner with an income of $100,000 a year to achieve a comfortable lifestyle in retirement.
It said while achieving a ‘comfortable’ lifestyle in retirement would be a major challenge for low-income households, salary sacrifice contributions and/or personal contributions attracting the co-contribution could lead to the achievement of a ‘modest’ lifestyle or better retirement.
The ASFA research paper said the retirement income system in Australia had essentially moved from one where the emphasis was on poverty alleviation among the aged to one where the emphasis was on achieving a modest or comfortable standard of living in retirement.
AUTHOR
Mike Taylor
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