How much Superannuation do I need?
Even though employer funded Superannuation has been effective in Australia
since the Labor Party led Federal Government in 1992, Australian are under
financing their retirements, leaving some with inadequate funding, through
Super, to finance their retirements effectively.
So "How much superannuation" do we need to retire comfortably?
According to Liberal Government estimates, you an I need to save
12 per cent of our annual income for the 36 to 40 years of our
working life to giveourselves an income equal to 40 per cent of
our before retirement salary. And most of us want more than 50%.
So if you earn $50,000 now, a good starting point would be to
think of a retirement income of about $30,000 a year.
Not bad if you want the easy life. But for those of us who want
adventure and fun, $30,000 a year is not quite enough.
How much superannuation is enough?
There is no simple formula, but all the experts agree, the sooner
you start your Superannuation Plan, the better.
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Lets look at some considerations.
First you need to consider what sort of life style you want in your retirement?
What age do you want to retire at? What financial committments will you
have at retirement age? For example, mortgage, insurance, medical expenses
and the like. Do you need the services of a Financial Planner?
Lets have a look at the figures! These figures are based on the ANZ
Bank Superannuation calculations as of the 4/5/2006.
The amount you would have to contribute towards a Superannuation Fund.
40 |
$94 |
$187 |
$281 |
$374 |
45 |
$147 |
$294 |
$441 |
$587 |
50 |
$243 |
$487 |
$730 |
$974 |
55 |
$449 |
$897 |
$1,346 |
$1,795 |
60 |
$1,090 |
$2,180 |
$3,270 |
$4,360 |
Figures are based on the above retirement lump sum amounts, the following
table demonstrates the weekly income you'd receive in retirement and
how long it will last if invested properly.
70 |
$1,154 |
$2,308 |
$3,461 |
$4,615 |
75 |
$687 |
$1,373 |
$2,060 |
$2,746 |
80 |
$538 |
$1,076 |
$1,615 |
$2,153 |
85 |
$469 |
$938 |
$1,408 |
$1,877 |
90 |
$432 |
$863 |
$1,295 |
$1,726 |
95 |
$409 |
$818 |
$1,228 |
$1,637 |
Assumptions:
- A person retires at 65 years of age and currently has no superannuation.
- Superannuation contributions are taxed at 15% and no superannuation
surcharge applies.
- Superannuation earns 8% per year.
- 20% of the income is assumed to include imputation tax credits
from Australian share dividends.
- Capital gains are taxed at the concessional tax rate (effectively
10% for superannuation).
- Superannuation is withdrawn as a lump sum payment at 65 years
of age and taxed at 16.5% (the first $100,000 is tax free).
- Post retirement funds are fully invested and earn 8% per annum
- Personal tax liabilities in retirement are not included in
the model.
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You can use this Superannuation
Calculator to calculate how much Superannuation you will need to retire
comfortably. |
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Make A Financial Difference.
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