top of page
  • Writer's pictureKatherine Kohan

Australia's supers are super

Updated: Oct 28, 2023

How Australia gets retirement savings right

Australia was ranked 5th out of 47 in the developed world for its retirement system. The US got 44th out of 47.

I first saw this as part of a WSJ article titled "The U.S. Gets a C+ in Retirement."

What stood out to me was not just the US's poor performance but the very strong performance of Australia. Why is that?

What is a super?

Superannuation (or 'super') is a compulsory system of placing a minimum percentage of your income (11% right now) into a fund to support your financial needs in retirement. (Source)

The critical difference between the 401(k) in the US and the Australian super is that the Aussie super is required, at a set percent and applies in almost all situations, while the US 401(k) is optional and applies in fewer situations. Both the super and the 401(k) are subject to some contribution limits. The super is taxed at 15% and then when you withdraw it is tax free - so think of it almost as BETTER than the roth 401(k).

Does that mean everyone in Australia can retire comfortably?

Definitely not. While the idea of the super has been around since at least the 1900s, the official program started in 1991. (Source). There are frequent news postings about how many have not saved enough for retirement.

Is Australia wealthier than the US?

Yes. The top 1% in Australia have more wealth than the top 1% in America.

This also holds true for the typical Australian versus the typical American. The median wealth per adult in Australia is over $250,000 versus in the US at slightly under $100,000 per a Credit Suisse study (here).

For a more complete picture, this article discusses it more fully here. Relevant quotes are noted below.

America ranked second in terms of average wealth per adult (KK note: in 2021 $) at $US579,050 (KK note: with Switzerland ranked first), a recently released report from investment bank Credit Suisse found – but that statistic is famously skewed upwards by the very, very wealthy. According to the “more relevant” metric of median wealth, however, Credit Suisse said Australians came out on top. Australians collected a higher median wealth per adult than anywhere else in the world at $US273,900 – nearly three times the median wealth of $US93,270 ($A133,100) in the US....

And the super and real estate in Australia are what to thank most likely.....

Professor Susan Thorp, an finance professor at the University of Sydney Business School, said Australians had their superannuation savings to thank for the huge discrepancy. Wealth was defined as the value of a household’s financial and real assets – including real estate and super – minus any debt. “About 40 per cent of US households don’t have private retirement accounts like our superannuation, and rely mainly on social security payments after they leave the workforce,” Professor Thorp told “The report includes retirement savings assets, but not entitlement to state pensions – which means our superannuation savings are counted, but US social security entitlements are not.” Australia’s compulsory super system meant even Australians on the poorer end of the median wealth scale could accumulate financial assets, Professor Thorp added.

While this post is focused on supers, it must be pointed out that Australian wealth is driven proportionally more by real estate than it is for Americans on average. The average Australian wealth is 51% in real estate, versus 37% in the US. There are many articles on how the Australian real estate market is not working.

Hope you have enjoyed these interesting facts on Australia and its retirement approach. Keep it up Australia!

102 views1 comment

Recent Posts

See All

1 Comment

Oct 28, 2023

Very interesting! Way to go Australia! I will share this info with our Swiss guests who are here for 2 weeks!

bottom of page