Money

How does your super balance compare to other people your age?

Written by: Natalie Peng, Lecturer in Accounting, The University of Queensland

If you have ever checked your super balance and wondered whether you are “behind” for your age, you aren’t alone.

To see where you truly sit, you should ignore “averages”, which can be skewed by a small number of very large balances. Instead, we look at the median ^[1], which is the middle value. Half of people have more than this amount, and half have less.

Some of us use our balance as a scorecard for how well we are doing at life. But super balances are rarely about how “good” you are with money. They are just a mirror of your working life. They reflect whether you worked full-time, took career breaks, or moved between jobs.

It’s easy to put off thinking about superannuation when retirement is years away. In this five-part series, we ask top experts to explain how to sort your super in a few simple steps, avoid greenwashing, and set goals for retirement. When the super gender gap widens You’ll notice in this table that the gap between men and women is small in their 20s but grows significantly from their 30s.

This is not a coincidence. Australia’s super system was built ^[3] in the 1990s around the idea of an uninterrupted, full-time career over 40 years. In reality, many women reduce working hours or take parental leave during their careers. This slows their super contributions at exactly the point where long-term growth matters most. In the super world, a dollar contributed at age 25 is worth far more than a dollar contributed at age 50, because it has more time to grow. Missing those mid-career years does not just mean contributing less.

It means losing decades of compounding that cannot easily be replaced later. Retirement savings are individual, but family decisions are shared Australia’s super system treats us all as individuals. But most households make financial decisions together. A couple might jointly decide that one parent will step back from paid work to care for children. Yet the retirement savings impact falls entirely on one person’s account. The gender gap when people near retirement is clear in the data ^[4].

Men aged 60 to 64 have a median super balance of $219,773, while women have $163,218. Moreover, in that age bracket, 23% of women have no super at all, compared with 13% of men. One way to manage this gender gap in retirement savings is through contribution splitting ^[5]. This allows some concessional contributions made by the working partner to be transferred into the other partner’s super account. It can help both people maintain retirement savings, even if only one is currently earning an income.

Why playing it safe can be risky Your super is invested across a mix of asset classes, such as cash, bonds, property and shares, to help it grow. Most Australians are in a “balanced” option in the MySuper product ^[6], which is the default option if you don’t make an investment choice. This mixes higher growth assets like shares with more stable assets such as cash or bonds.

Cash and bonds tend to offer steadier returns in the short term but lower expected growth over longer time frames. Shares are more volatile from year to year but have historically delivered higher long-term returns ^[7].

If you are young, playing “safe” can actually be a risk. With 30 years or more until retirement, a conservative option might protect you from a small dip today, but it stops you from getting the growth you need to live comfortably later. For a 25-year-old, the “roller coaster” of the stock market can turn out to be their best friend in the long run.

Consistency matters

The most powerful tool in your super is compounding ^[9]. This is just a fancy way of saying you earn money on your money.

Small, regular contributions made early in your career can have a much larger impact than larger contributions made later in life. Adding an extra $20 a week in your 20s may ultimately do more for your retirement balance than adding $100 a week in your 50s, because the earlier contribution has far longer to grow.

One simple move: The 1% rule

You don’t need a complicated plan to boost your super. A great strategy is to “tax yourself” whenever you get a pay rise.

If you get a 3% raise, consider putting 1% into your super. You can do this either through voluntary contribution, or by asking your employer to increase your super contributions through a salary sacrifice ^[10] arrangement.

The latter option may be an easier way to save for some people, as the extra contribution is automatic – set and forget.

Because this contribution comes from pre-tax income, you won’t feel the difference in your take-home pay, but because that money goes in before you see it, your “snowball” starts growing much faster without you having to change your lifestyle.

Your super balance is shaped as much by timing and life choices as by income. You cannot control every career break or life decision. But you can control whether small amounts go in early and consistently. The sooner your money starts working, the less you will have to.

Disclaimer: This article provides general information only and is not intended as financial advice.