Super at 40 — Where Should Your Super Balance Be and What to Do Now

Your 40s are one of the most important decades for superannuation. You still have 20–25 years of compounding ahead of you — enough time to significantly change your retirement outlook — but the decisions you make now matter more than they did in your 30s.

Key Takeaways

• Median Australian super balance at 40–44 is approximately $80,000–$110,000
• Your 40s are often peak earning years — the tax saving from salary sacrifice can be at its largest
• With approximately 20 years until age 60, compounding still has significant time to work
• Check your insurance cover in super — premiums increase significantly after 40 and the cover amount may reduce
• Review your investment option — a growth allocation may still suit those 20+ years from retirement

How Much Super Should I Have at 40?

Based on APRA data and ASFA modelling:

APRA average reflects all members including those with interrupted careers, periods of unemployment, or time abroad. Many Australians in their early 40s sit below both the average and the target.

The “on-track target” assumes a single person aiming for a comfortable retirement (~$52,000/year at today’s values) at 67, with partial Age Pension support. It is not a guarantee — it is a rough indicative benchmark.

If your balance is significantly below $150,000 at 40, you are not unusual, but it does suggest action is worthwhile.

What a $200,000 Balance Grows to by 67

At 40 with a $200,000 balance and ongoing 12% SG contributions on an $80,000 salary, at a 7% annual return:

• At age 50: ~$470,000
• At age 60: ~$860,000
• At age 67: ~$1,200,000+

Small changes in contribution rate or investment return compound significantly over 27 years. See the Super Calculator to model your own scenario.

Why Your 40s Matter More Than Your 20s

Counterintuitively, dollars contributed in your 40s may be more impactful than those in your 20s — because your income (and marginal tax rate) is likely higher, meaning:

• The tax saving on salary sacrifice is larger — if you’re earning $100,000+, your marginal rate is 34.5%, and the gap versus 15% contributions tax is 19.5%+ per dollar
• Carry-forward contributions — if your Total Super Balance (TSB) is under $500,000, you can use unused concessional cap space from the past 5 years, potentially contributing much more than $30,000 in a single year

Key Strategies in Your 40s

1. Review your investment option

Most Australians default into a balanced or lifecycle option. At 40, with 25+ years until retirement, a growth or high growth option may generate significantly higher returns. The additional short-term volatility is recoverable over this time horizon.

See Growth Super Fund Option.

2. Start salary sacrificing

Even $5,000–$10,000/year in salary sacrifice can make a material difference by 67. The tax saving is real and immediate — see the Salary Sacrifice Super Calculator.

3. Check and reduce fees

Moving to a lower-fee fund (even a 0.5% fee reduction) on a growing balance adds meaningfully over 25 years. See Cheapest Super Funds Australia.

4. Consolidate old accounts

Many Australians in their 40s have multiple accounts from previous jobs, each draining insurance premiums and administration fees. Consolidate into one — but check insurance first.

See How to Consolidate Your Super.

5. Use carry-forward concessional contributions

If you have had years of low or no concessional contributions (e.g., career break, low-income period, time overseas), and your TSB is under $500,000, you may be able to “catch up” by contributing more than the $30,000 annual cap.

See Carry-Forward Contributions Explained.

6. Make a binding death benefit nomination

At 40 you likely have dependants — a partner, children. Ensure your super goes where you intend by lodging a binding death benefit nomination.

See Binding Death Benefit Nominations Explained.

Super and Major Life Events at 40

Your 40s often coincide with significant life events that directly affect your super:

Divorce or separation: Super is treated as an asset in family law proceedings. It can be split between parties as part of a property settlement — even while it remains preserved. This doesn’t trigger tax at the time of splitting. See Super and Divorce.

Redundancy: A redundancy payment itself is not a super contribution. However, receiving a significant payout can be an opportunity to make a large concessional or non-concessional contribution in the same financial year — subject to caps and eligibility.

Career change or income drop: If your income falls — for example, moving from employed to self-employed or taking unpaid parental leave — your SG may pause. Track the carry-forward opportunity: unused concessional cap space from years of lower contributions can be used later when income recovers.

High Earners at 40 — Division 293 Tax

If your income exceeds $250,000 (including super contributions), Division 293 tax applies: an additional 15% tax on concessional contributions. This means salary sacrifice is taxed at 30% rather than 15% — still significantly lower than the 47% top marginal rate, so salary sacrifice remains advantageous at high incomes.

For Australians with rapidly growing super balances, the proposed Division 296 tax (from FY2025–26) would impose an extra 15% on earnings attributed to balances above $3 million. At 40, this threshold is unlikely to be immediately relevant for most people, but high earners with large balances should be aware.

See Division 293 Tax and Division 296 Tax.

What to Do This Financial Year (FY2025–26)

Actionable checklist if you’re 40:

1. Project your retirement balance using the Super Calculator with your current balance, income, and target retirement age
2. Check carry-forward concessional contributions available to you via myGov → ATO → Super
3. Review your investment option — balanced vs growth vs high-growth given your 20–25 year horizon
4. Set up salary sacrifice if you haven’t already — even $5,000/year over 25 years has a meaningful impact
5. Check your binding death benefit nomination is current (lapsing nominations expire every 3 years)
6. Review insurance in super — premiums rise after 40 and your cover level and premium should be reassessed

Frequently Asked Questions

Is it too late to boost my super at 40 if I haven’t done much? Not at all. With 20–25 years until preservation age, compounding still has significant time to work. A $50,000 extra contribution at 40 at 7% p.a. over 25 years grows to approximately $270,000. Starting now matters far more than what has or hasn’t happened before.

I have $200,000 at 40 — is that good? It’s broadly in line with the APRA average for 40–44 year olds and slightly below the “on-track” target for a comfortable retirement. It’s a very workable starting point with consistent contributions and a suitable investment return over the next 25+ years.

What is Division 293 tax and does it affect me? Division 293 applies an extra 15% tax on concessional contributions for individuals with income over $250,000. Super contributions are still taxed at only 30% total — well below the 47% marginal rate — so salary sacrifice remains worthwhile even at high incomes. See Division 293 Tax.

Should I put extra money into super or pay off the mortgage at 40? This is one of the most common questions for 40-year-olds. The comparison hinges on your mortgage rate, expected super return, and tax bracket. At a 37% marginal tax rate, salary sacrifice saves 22 cents per dollar immediately before investment returns. At a mortgage rate of 6% and a super growth option returning 8%, super often wins mathematically — but comfort with locked-in funds matters too. See Super vs Property.

How do I know if my fund is performing well? Compare your fund’s 10-year net return (after fees) against peers using the APRA heatmap or ASIC’s YourSuper comparison tool. Underperforming funds can cost tens of thousands of dollars over a 25-year period. See Best Performing Super Funds.

For further reading: Super Calculator, Super at 60 — What Changes, Boosting Your Super Before Retirement, Carry-Forward Contributions. For advice tailored to your situation, speak with a licensed financial adviser via MoneySmart.