Super – how much do I need?

Published on September 22, 2015 3:05 pm, by

Given that I’m entering the prime of my life AKA middle age, (40s are the new 20s right?), I thought it was time to check out my Super status. 

Finding my balance was easy enough, after all my account is linked to my MoneyBrilliant profile (shameless plug).

The fun began when I tried to find out how much I need for retirement.

What did I do?

I started by googling “how much superannuation will I need in retirement”.

I had a look at a few different sites and found their calculators, going on to play with the numbers a little.

What did I learn?

Often the number (total funds you need in Super before retirement) that you are given seems somewhat arbitrary.  Some websites did not ask me if I would own my own home in retirement.  Living expenses can vary dramatically based on that one fact.

A website that didn’t ask me about my living situation suggested that I need $548,000 in retirement, while another allowed me to put in $550 per week rent and told me that I needed $1,300,000.

Be sure to find a website that allows you to customise what you want and need in retirement.  This includes changing the default options on the age of retirement and your life expectancy.  You should be able to indicate if you have one-off large expenses that you are expecting, for example a bathroom renovation or overseas holiday.  Play with the numbers a little to get a realistic idea.

What do I need to do now?

Given that I’m already a little more educated about the numbers, I need to take a look at the following:

My investment options

As I intend to work for another 25+ years, can I be more aggressive in my strategy?  Money Smart has some great information on the different investment options you would tend to find in a Super Fund.

Salary Sacrificing

Funds that are directed straight from your salary in to your Superannuation are taxed at 15% rather than your marginal tax rate.  This can be a good strategy as less money goes to the tax man and more to your retirement.  Be aware that limits apply, and once your money is in a Superannuation environment it’s there until you retire (or meet special requirements).

Consolidate Super accounts and track down lost super

Make sure you have tracked all of your Super down.

If you haven’t already, consider consolidating Super accounts.  Look at fees, and make sure that if you have more than one account that you know why.

Check if you are eligible for the government co-contribution

You may be eligible for the government co-contribution.  This is a payment made to people who earn below a certain amount and make a personal (after tax) contribution.  If you have a spouse, they may be eligible if you are not.  Check the ATO website for specifics.

Put more money in there

Consider your options and strategies, at the end of the day, to grow your balance significantly you need to contribute more.

Be careful

With Super things change often, so keep on top of what’s changing and how that may affect the strategies you have in place.

Seeing a financial adviser may assist you in understanding how much you need, closing the gap between what you have and what you need, and putting in place strategies to grow your Super balance in the timeframe between now and retirement.

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Jen is an experienced banking professional who loves wine, coffee, finding a bargain and of course her three beautiful children. Since Jen's first budget led her to buy a home at 20, Jen has passionately helped others to make better decisions with their money.

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