OBSERVATIONS | WHY SUPERANNUATION ALONE MAY NOT BE ENOUGH

Australia is facing a challenge. As a nation we are living longer and government expenditure relating to pension, health and aged care is escalating. Retirees need to ensure they have sufficient funds to last them after they stop working, and the Government faces challenges setting policies that will help accommodate the cost of supporting older generations through retirement.
In this article, we explore what the future might hold for Australia’s retirement income system, and why there is likely to be a greater reliance on retirees’ personal wealth as a means of funding retirement.


  • With a smaller workforce supporting a growing number of retirees, age pension costs are expected to grow further, and it is likely the Government will continue to raise the hurdle for future retirees trying to qualify for the age pension. This means that retirees will likely need to rely more on their personal wealth as a means of funding their retirement. 
  • The main challenge for the Australian superannuation system is to deliver higher superannuation balances at retirement so Australians have a greater sense of financial security once they are no longer working. Unfortunately, superannuation balances are currently falling short, with many Australians running out of funds before the end of their lives.
  • While we can never be certain that the SG rate will rise beyond 12%, or what the path of future policy reform will be, ASFA research does note that super balances are rising and more people are expected to achieve a self-reliant retirement in the future.
  • As it will be another 30 years or so before most individuals can benefit from a mature SG system, and currently many Australians are running out of super well before the end of their lives, it is imperative that people include voluntary savings and investments as part of their retirement plan.