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It has been estimated that a single woman who is currently 65 years old and ready to retire will need around $519,000 to produce the annual income of $40,412 that is needed for a ‘comfortable’ lifestyle up to age 90. This is slightly more than a man of the same age would typically require because women generally have longer life expectancies than men which can affect Age Pension entitlements (2).
That might seem like an awful lot of money, but your 9% super guarantee contributions give you a good head start. How much more you may need on top of your super guarantee contributions varies greatly.
The table on the next page contains examples of the amount of
additional super contributions above the 9% SG contributions
needed to produce an account balance at retirement that
would produce a comfortable lifestyle until age 90. And
there's a big difference depending on your age when you
start making additional contributions. -
These numbers are only a guide, but they
do demonstrate the advantage of starting
early.Stuart starts making additional
contributions at age 25. He's already
accumulated $10,000 in super and it is
estimated that he only needs to
supplement his 9% super guarantee (SG)
contributions with salary sacrifice
contributions of 8.3% a year to reach his
retirement savings goal of around $514,000.Jennifer, Michael and Robyn on the other hand, would need to make larger additional contributions. While the numbers aren't precise, they give you a guide to the level of "catch up" contributions required to meet their saving goals.
The key message to take from this example is don't delay!
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When it comes to superannuation and planning for financial independence we understand that it's not a level playing field.
Low salaries, broken work patterns, family commitments, divorce, sickness are just some of the reasons that may make additional contributions to super challenging.
It is wise to make the best of what you have and start taking control.
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