How to Start Saving for Retirement in Australia: A Young Adult’s Step-by-Step Guide

Planning for retirement might feel like a lifetime away when you’re in your 20s, but starting early can drastically change your financial future. In Australia, young adults (ages 23–30) have unique retirement opportunities thanks to compulsory superannuation and access to government incentives. If you want to retire rich—or even retire early—this guide is your starting line.

We’ll walk you through the essentials of retirement saving in Australia, from understanding your super to leveraging tax-advantaged savings strategies. With the right moves now, your 60s self will thank you massively later.

Why Retiring in Australia Requires Early Planning

Australia has one of the world’s top-ranked pension systems, primarily driven by its Superannuation Guarantee and a mix of private savings. However, rising life expectancy, inflation, and changing work trends mean that relying solely on super isn’t enough.

Average Australian retirement age: Late 60s
Average lifespan: Over 83 years
Recommended retirement savings target: Over $500,000 per person

That’s why it’s crucial to build a retirement strategy early while time and compound interest are on your side.

1. Understand How Superannuation Works (Your Key Retirement Vehicle)

Superannuation, or “super,” is the backbone of retirement savings in Australia. By law, employers must contribute 11% (rising to 12% by 2025) of your salary into a super fund.

Key features of superannuation:

Employer contributions: Compulsory based on your income
Tax advantages: Contributions and earnings taxed at 15% (lower than most income tax rates)
Locked until retirement age: Generally accessible at preservation age (between 55–60)

Tip: Track your super account using the ATO portal in MyGov to consolidate multiple accounts and reduce fees.

2. Make Extra Contributions Early

You can turbocharge your retirement by making voluntary contributions into your super fund. These come in two forms:

Concessional (before-tax): Salary sacrifice or personal deductible contributions, with a cap of $27,500/year
Non-concessional (after-tax): Up to $110,000/year or $330,000 over 3 years (bring-forward rule)

Strategy: Start small—try diverting even $20/week into super. It reduces your income tax and creates long-term compounding growth.

3. Set a Retirement Savings Goal

Based on ASFA’s Retirement Standard, a “comfortable” retirement in Australia requires about:

Singles: $595,000 in retirement savings
Couples: $690,000

Assuming 7% average annual returns, starting $100/month at age 25 could grow to over $250,000 by 65—without employer super included!

Use this formula:

Annual amount needed × 25 = Target retirement fund (following the 4% withdrawal rule)

4. Leverage Government and Tax Incentives

The Australian government offers several schemes to help young adults boost retirement wealth:

Super Co-contribution: Earn under $58,445 and the gov contributes up to $500 when you put in $1,000 after-tax
Low Income Super Tax Offset (LISTO): Up to $500 per year if you earn <$37,000
First Home Super Saver Scheme: Save for a house in your super and withdraw later—get tax benefits now

5. Invest Beyond Super: Build Additional Retirement Income Streams

Diversification is critical. While super is powerful, it may not be enough if accessed too late. Here are other options:

Index funds: Low-cost, long-term investments ideal for compound growth
Property: Rental yields + capital growth build long-term wealth
REITs or ETFs: Accessible, diversified exposure even with $50+ per trade

Tip: Use apps like Raiz, Spaceship, or CommSec Pocket for micro-investing—even with small amounts weekly.

6. Avoid These Early Retirement Mistakes

Thinking superannuation alone is enough
Delaying contributions until your 30s or 40s
Withdrawing super early (i.e., during COVID hardship) without plan
Leaving multiple super accounts open and paying excess fees
Not reviewing investment options (default fund may be too conservative)

7. Automate Your Retirement Savings System

Building wealth quietly, consistently is the goal. Automate everything to stay disciplined:

Set direct debit for weekly investing (e.g.: $30 to index fund)
Use salary sacrifice to invest before you even see the money
Review contributions & fees annually, e.g., during tax return time

Recommended Tools:

Moneysmart Super Calculator
Canstar Super Fund Ratings
Your super fund’s annual member statement & app

FAQs

How much should I have in super by age 30 in Australia?

ASFA suggests around $28,000–$51,000 by age 30, depending on gender. But starting early and adding extra funds is more important than hitting a fixed number.

Is saving for retirement more important than saving for a house in your 20s?

You should ideally do both. But putting money into super offers tax advantages and compounding power that can make it smarter long-term. Use the First Home Super Saver Scheme to balance both goals.

How do I know if my super fund is good?

Check fees, investment returns over 5–10 years, and fund ratings via Chant West or Super Ratings. Funds with net returns above 7% after fees and insurance are good starting points.

Can I access my super early?

Yes, but only under strict conditions—like terminal illness or severe financial hardship. Early withdrawal dramatically affects future growth and is discouraged unless urgent.

What’s better: salary sacrifice or after-tax contributions?

Salary sacrifice lowers taxable income, so it’s more tax-efficient for medium to high tax brackets. If you’re earning under $45,000/year, you might benefit more from after-tax contributions plus co-contributions.

Conclusion: Start Small, Stay Consistent, Retire Wealthy

The best time to start saving for retirement is now. And the second-best time? Also now. Use your 20s as a launchpad toward financial independence. Automate your savings, optimize your super, and layer on smart investments outside of it.

The earlier you start, the less you’ll have to contribute over time—and the more freedom you’ll have in your 50s and 60s to travel, create, give back, or even retire early.