A $500,000 superannuation nest egg will not provide the average Australian with a comfortable retirement until they die.
A study to be presented to the Melbourne Institute/The Australian Growth Challenge conference today warns that despite people's current beliefs, even large superannuation balances, far beyond current averages, will not sustain retirees unless they are prepared to drastically pare back their lifestyle, The Australian reports.
With life expectancy now climbing beyond 90 for those who reach the age of 65, the drain on the public purse will only grow as retirees are increasingly forced to draw on the age pension as their personal funds run out.
David Cox, head of government relations for financial services provider Challenger, said with so many baby boomers heading into retirement, managing the costs of ageing would be a critical challenge facing the nation, and the private sector could play a key role in finding ways to make super funds stretch further.
Mr Cox said only those "prepared to live quite modestly'' could expect their super to take them through to the end of their life.
Actuarial modelling using income of $19,399 a year as the "modest'' benchmark and $37,452 as a "comfortable'' amount for an individual's needs, found $500,000 in superannuation would last a person drawing the comfortable amount each year to the age of 89, still a year shy of the average life expectancy for someone reaching 65.
"Most people with $500,000 in superannuation assets would probably expect both to obtain more from an allocated pension and for it to last longer,'' he said.
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