How much super should I have in my 30s and 40s?

Our 30s and 40s are some of the busiest years of our lives. It’s also a time when we tend to have big financial commitments – like buying and paying off a home, and raising a family, all while climbing the career ladder.

With so much on the go, household budgets can be thinly stretched. Retirement can seem like a long way off, and growing our super can be put on the backburner.

The thing is, these are the years when we can really harness the power of compounding. Even small sums added to super at this life stage can really ramp up your final balance by, say, age 65.

Happily, there are plenty of budget-friendly ways to help grow your super.

Before we look at these strategies, let’s answer the question ‘How much super should I have?’

I have to stress, there is no one-size-fits-all figure. We each have different goals for retirement, different life expectancies, and varying levels of non-super investments that can also be a source of income in retirement.

That said, as Table 1 shows, men aged in their 30s have an average super balance of $32,856. According to industry super body ASFA, that’s about $26,144 less than a man at this age should have in order to be on track for what ASFA regards as a ‘comfortable’ retirement.

This shortfall isn’t limited to 30-something men. Both men and women in their 30s and 40s have plenty of catching up to do. By age 40, women in particular, can face a super deficit averaging $91,382.

These figures are based on ASFA’s calculations, which show retirees need $595,000 by age 67 to live comfortably in retirement.

A very different set of figures is provided by Super Consumers Australia (SCA)[1], which takes Age Pension entitlements into account when calculating savings targets for retirement.

SCA says that to earn a ‘median’ income in retirement, today’s retirees aged 65 need $279,000 in super as a single, or $371,000 for a couple.   

5 low cost ways to boost your super in your 30s and 40s

If your super is on the lean side, check out these low-cost steps to grow your balance:

1. Check your fund fees

The fees your fund charges can significantly impact your super balance at retirement. Across Canstar’s database, super funds charge, on average, fees between 0.91% and 1.21% of your account balance each year[2]. If your fund is at the high end of the spectrum, it could be worth thinking about moving to a fund offering better value.

2. Rethink how your super is invested

Most Australians have their super in a default ‘balanced’ investment option. By choosing to give your super more exposure to growth assets, like shares, the long term returns can be far higher, and this can see your super skyrocket over time.

As Table 2 shows, a growth focus has delivered returns averaging 7.5% annually over the last decade compared to 6.5% for a balanced option.

The trade-off is higher volatility. Remember though, in our 30s and 40s, we may still have over 30 years to retirement.  This gives your super plenty of time to weather investment market highs and lows.

3. Grow your super while you shop

Platforms like Grow My Money (formerly Super-Rewards) and BoostYourSuper pay cashback rewards of up to 15% on purchases when you shop via the platform. Best of all, those cash savings go straight to your nominated super fund. It’s a simple way to boost your balance.

4. Consider salary sacrifice

Salary sacrifice means having part of your before-tax salary paid into super instead of taking the money as cash in hand. These contributions are taxed at just 15%, and as that’s likely to be a lot less than your personal tax rate, more of your money goes towards your super instead of tax.

Making salary sacrifice contributions can reduce your take-home pay, but not always by a lot. A lower taxable salary can trim back the income tax paid each financial year.

5. Stick with one fund

Over 3 million Australians have multiple super accounts – often with the same fund^[4]. That means paying multiple sets of fees and insurance premiums, which will eat away at your super savings. Take a few minutes to check if you have more than one super account by linking your myGov account to the Australian Taxation Office (ATO), then select 'Super'.

Choose the fund that’s right for you, then fold all your super into one account. This can also be done via myGov. Take a moment to check your level of life cover is right for your needs while you’re there. Be sure to let your employer know if you’ve changed the account the boss’s compulsory contributions are paid into.

Other ways to build your super in your 30s and 40s include making a contribution from your own pocket. It could see you entitled to a government co-contribution of up to $500 if you’re a low to middle income earner.  Or talk to your spouse or partner about making a contribution to your fund. It can see your other half entitled to a $540 tax offset if your income is below $40,000. It’s a great way for 30- and 40-somethings to keep their super growing while on parenting leave.

*Table 1: Source: www.canstar.com.au – 30/05/2023. Average balances based on those reported in the APRA Annual Superannuation Bulletin (June 2022). Balance required today for comfortable retirement based on the Association of Superannuation Funds of Australia (ASFA) Super Balance Detective calculator for a person who turned 30, 40, 50 or 60 in 2023. Gap calculated as the difference between the average balance and the current balance required for a comfortable retirement. Comfortable retirement assumes ASFA’s Comfortable Standard balance of $595,000 (in today’s dollars) by age 67. ASFA assumes future pre-tax wage income of around $65,000 and then upon retirement the retiree draws down all their capital and receives a part Age Pension. Other assumptions include: Investment returns (nominal), before investment fees and taxes are 6.7%, investment fees are 0.7% of assets, the tax rate is 4.5%, administration fees are $100 per annum and insurance premiums are $100 per annum. The reported required balances are intended for illustrative purposes only.