When it comes to super, size does count. Your compulsory super contributions may not be enough if you want to be financially secure when you retire.

On average, Australian’s need 65% of their pre-retirement income to maintain the same standard of living after retirement. Put into numbers, this means the average each Australian will need $1,500,000 in superannuation funds at retirement (age 65 years).

There are two ways to work out approximately how much money you’ll need when you stop working.

Method 1 – Standard Estimates – Association of Superannuation Funds of Australia

Couple Annual Living Costs Superannuation Lump Sum Needed
Modest $33, 120 $431, 000
Comfortable $57, 195 $744, 000
Single Annual Living Costs Superannuation Lump Sum Needed
Modest $23, 032 $300, 000
Comfortable $41, 830 $544, 000

Method 2: 67% of pre-retirement income

Another way to estimate how much money you will need in retirement is to assume you need 67% of your income before you retire in order to maintain the same standard of living in retirement. This estimate is only suitable if your 67% is higher than the annual living costs figures in the standard estimates example.

Pre-retirement Income (total for couple or single) 67% of Income (per year) Superannuation balance at retirement required
Example: $95, 000 combined for a couple Example: $63 650 combined for a couple Example: $63 650/0.05 combined for $1, 273, 000 super
Your couple / single total income Multiply your total income by 67% Divide your annual income required by 5% return

To calculate your superannuation balance required at retirement to fund your retirement lifestyle: Divide your yearly income required in retirement by 5% (the average rate of investment return). Assumes capital investment is maintained for life.

Developing and implementing a suitable superannuation and retirement strategy is a valuable tool in assisting you to achieve your long term wealth creation goals. Making long term regular contributions to your superannuation can provide you with a highly tax efficient compounding investment proposition.

Fornaro Financial Group can assist in structuring your superannuation in line with your long term goals as well as your risk profile. By choosing the most appropriate superannuation structure for your personal circumstance, we will be able to ensure your superannuation contributions are being maximised to deliver you results for your retirement.

Self Managed Superannuation Fund

A Self Managed Superannuation Fund (SMSF) is currently the only superannuation platform where you can invest your own superannuation into direct property and therefore are becoming more popular with people wanting to take more control over how and where their superannuation is invested.

Fornaro Financial Group can establish and manage your Self Managed Superannuation Fund as well as provide recommendations on investment strategies suitable for you. A SMSF may be a more flexible and accountable strategy to assist you in creating long term investment opportunities, depending on your individual circumstances.

Tips for Superannuation Success

  • Understand
    your current superannuation structure and your retirement goals
  • Calculate
    how much you will need at retirement to fund your retirement
  • Compare
    to ensure you have the best fund, structure and investment options
  • Plan & Execute
    your strategy. Consult an expert and start now!