![]() In the first scenario we have assumed the benchmark performance of superannuation funds over the last 10 years (6.2%), Read more about the Best Performing Super Funds here.The return on investment achieved by your super fund is what moves the needle the most. Learn more about how Tax effects Superannuation Returns here Return on Investment Important Note, the calculator DOES NOT take into account tax. For the sake of the example, we have assumed you do not receive any of these benefits. This part of the calculator assumes you will receive additional income through retirement such as a part time job, inheritance or gifts. For the sake of the example, we have assumed you do not access any income from government sources. This part of the calculator assumes you can access government benefits like the pension. Source: ASFA Retirement Standard, December quarter 2019 Income from Other Sources Still not ridiculous but a bit more than the suggested averages from AFSA (see table below) ASFA Retirement Stand ard Gareth is used to niceish cars, an international holiday once a year and an expensive wine habit so we’ve assumed a bit more. Much of the internet suggests that you should need around two thirds of your pre retirement income to maintain the same standard of living in Australia. Desired Retirement IncomeĪnother major needle mover, how much income you need in retirement will greatly affect the amount of money you need at retirement. Read more about how Inflation affects investment returns here. In theory you should also have your funds invested where you can achieve at least the inflation rate or better. This helps to understand the time value of money and how inflation can easily eat into investment returns. This number is really important and often forgotten. Obviously if you can achieve risk free investments at better than 2% through retirement, you will have more to spend. For the sake of the examples, we have assumed that your investments will revert to cash from when you retire. The ROI for Retirement Funds is the expected performance of your superannuation investments from retirement to end of life. However for the sake of the examples, we’ve gone with age 60. Gareth has an optimistic dream of being able to retire at age 60 like many baby boomers however the realistic fact for many Australians is working until much later in life. We have assumed a starting balance of $500,000 AUD Understanding the numbers post retirement Age at Retirement Current Superannuation (Retirement) Savings We have however ‘modified’ the numbers to take advantage of the $25,000 tax concession. The percent of income invested we have assumed 9.5% which is the current compulsory superannuation contribution for employed Australians. Or you could look at it as being able to contribute $24,700 per annum to super until age 60. The annual income increase box can move the needle substantially as it will adjust the superannuation contribution of which we Australians are limited to keep things easy to follow, we’ve assumed no pay rises until retirement. Thus we have used an annual income of $260,000 as $260,000 x 9.5% = $24,700 contribution to super each year. In Australia all individuals are entitled to a $25,000 superannuation contribution limit and a compulsory 9.5% from your employer. Its really only used to calculate the contributions to super in percentage terms. This one doesn’t make as much of a difference as you think. Gareth went with 90 as the target life expectancy. Living in Australia, the official stats say the life expectancy is 82.50 so I can only assume that I should have a high chance of hitting that. For me, I have a fairly non physical job, not really at any risk of dying on the job unless my keyboard and my grandparents lived to 90+. This one is really important as it moves the needle a lot. Gareth is 35 so the scenario is based on him. This one is fairly obvious and the sooner you start thinking about your retirement, the easier it will be to look at Superannuation investment opportunities. Understanding the numbers pre retirement Current Age Summary – Start a Self Managed Super Fund today.Scenario #4 – Sitting your funds in cash.Understanding the numbers post retirement. ![]()
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