How much super do I need?
To help answer this question, here are some useful tools:
How much should I be saving to achieve a comfortable retirement?
How much you will need to save will depend on what savings you start off with, how long it is until your retirement, and what level of retirement income you are seeking.
The table below sets out in broad terms what an individual might have to save, in terms of percentage of their income, in order to meet certain retirement income targets. Relying on compulsory superannuation contributions will not be enough for most employees if they want to achieve 60% of pre-retirement income in retirement. The type of final incomes involved with this target in terms of the dollars per year are consistent with goals based on achieving either a modest or comfortable standard of living in retirement. For instance, a 60% replacement rate for someone on $75,000 a year would generate an income sufficient to fund a comfortable standard of living in retirement.
| Percentage of income over and above the 9% Superannuation Guarantee required to be saved to achieve 60% of pre-retirement income (a) |
|
Final income (Retirement income sought)
|
| Years to retirement |
$35000 ($21000)
|
$50000 ($30000)
|
$75000 (b) ($45000)
|
| 5 |
94%
|
127%
|
153%
|
| 10 |
43%
|
60%
|
74%
|
| 15 |
24%
|
35%
|
44%
|
| 20 |
13%
|
22%
|
28%
|
| 25 |
7%
|
14%
|
19%
|
| 30 |
3%
|
9%
|
12%
|
| 35 |
1
|
5%
|
8%
|
| 40 |
|
2%
|
4%
|
Source: Association of Superannuation Funds of Australia (ASFA) as at October 2006
Assumptions
(a) Projections based on fund net (after tax and fees) earning rate of 7% nominal and growth in average earnings of 3.75% with contributions being made by the employer and subject to 15% tax.
(b) Individual on $75,000 a year is not subject to the superannuation contributions surcharge if receiving contributions at the SG rate of 9%. Additional contributions quantified in this table are assumed to be salary sacrifice, with total salary and superannuation contributions remaining under the surcharge threshold.
Before making a decision about your superannuation, you may wish to obtain financial advice from a licensed or authorised financial adviser.
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