Many of us daydream about the day we finally retire and are able to do the things we’ve longed for, whether that’s travelling the world, campervanning around Australia, improving our golf or gardening skills, or spending more time socialising or with our grandchildren.

But if we are just sitting back while our employers make mandated Superannuation Guarantee contributions on our behalf each quarter, those dreams may never become reality.

Retirement dreams vs reality

A survey commissioned by Industry Super Australia shows that instead of kicking their feet up, more than a quarter of the recently retired had to go back to work, many to keep the lights on.

The study also found that 38% of recent retirees are either surviving on a very tight budget with only enough for essentials or that they were not making ends meet.

One reason for this is because Australians are living much longer than they used to.

The Australian Bureau of Statistics’ Australian life tables show that the average 65-year-old male can look forward to living another 19.9 years, while the average female is likely to enjoy 22.6 more years.

So it’s no surprise that global wealth, wealth and career consultant Mercerreports that on average, 50% of retirees are likely to outlive their savings by more than five years – and 25% are expected to outlive their savings by 10 or more years.

Will I have enough super to retire?

So are you accumulating enough super to have the retirement you dream of?

According to the Australian Securities and Investments Commission’s MoneySmart website, if you own your own home, a rule of thumb is that you’ll need two-thirds (67%) of your pre-retirement income to maintain the same standard of living in retirement.

Similarly, the Association of Superannuation Funds of Australia’s (ASFA’s) 2018 Retirement Standard finds that a single people will need $545,000 in retirement savings and couples will need $640,000 to have a comfortable retirement.

If your super is nowhere near these figures, it may be time get real about your approach to retirement.

The different ‘tiers’ of retirement lifestyle

ASFA says a comfortable retirement lifestyle will allow you to be involved in a broad range of leisure and recreational activities and to be able to buy household goods, private health insurance, a reasonable car, good clothes, a range of electronic equipment, and domestic and occasionally international holiday travel.

A more modest lifestyle with less super in retirement, however, may only allow you to afford the basics.

Relying on a full Age Pension could be tougher. Single pensioners currently receive $933.40 a fortnight, including the maximum pension supplement and energy supplement. Couples receive $1,407.00 a fortnight.

Basically, the Age Pension is designed to provide a safety net for those unable to save enough through their working life and to supplement the retirement savings of others. However, the government also encourages additional retirement savings through the compulsory superannuation guarantee employers contribute, voluntary superannuation contributions and other private savings.

Super strategies to consider if you don’t have enough

It’s not too late to start growing your super by making extra contributions to your super or to consider salary sacrificing, where a portion of your before-tax income is paid into your super by your employer.

If you are aged 55 to 60, you could consider a “transition to retirement” strategy which allows you to boost your super and save on tax while you keep working.

Plus, if you are 65 years old or older and meet the eligibility requirements, you may be able to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

Most importantly, you could review the investment strategies, investment options and asset allocation within your super fund and other investments to ensure these are in line with your retirement plans and requirements.

Rick Maggi, Money & Life, FPA