Will compulsory super be enough?

Will compulsory super be enough?

While compulsory super will help you fund your retirement, it may not give you the retirement lifestyle you want. Before thinking about relying entirely on what your employer puts in, consider the following:

• Things will cost more in the future due to inflation. For example, if a car costs $30,000 now, in ten years the same car will cost $40,317 and in 40 years it will cost $97,861 (assuming a 3% p.a. inflation rate)!  You might want extra savings to ensure you can maintain your standard of living.

• As the Australian population ages there will be fewer taxpayers to fund the age pension relative to the number of retirees. By the time you reach retirement, access to the pension may be very limited. Planning your retirement with the hope of living comfortably off the pension is probably not realistic.

• For some people, their retirement period is likely to be as long as the time they spend in the workforce. Life expectancies have increased significantly. Men aged 65 can expect to live until 81 while women can expect to live until 85. Chances are your retirement could easily span twenty years or more and you'll need substantial savings to provide for it.

• Few people have a continuous work history. A substantial amount of time may be spent on travel, studies, and child raising during your working life. And with frequent corporate restructures, time out of the work force as a result of redundancy can't be ruled out. This means less time to accumulate your super.

Research has shown that employer contributions alone may not provide enough for the average person to meet their financial obligations in retirement.