1. Super in a nutshell
If your super’s in the too-hard basket, read on so you can take control
and make the most of your money.
Produced by AMP Life Limited and published on 18 June 2015. Original article.
The Australian superannuation system comprises money from working and retired
Australians. All up, it’s projected to total $8 trillion by 20331
and some of that is likely to be
your money. If you take an interest in your super today, you may have more in your hand
down the track.
What is super?
In 1992, the Australian government introduced a compulsory superannuation system in
response to the financial challenges posed by a growing aged population.
In Australia many of us are able to choose our super fund and have a say in how our
money’s invested. But unlike the superannuation systems of other countries—in Europe for
example there is an expectation that in retirement you’ll receive 60–80 per cent of previous
earnings—our pension system offers only around 25 per cent of the average wage. And it’s
means tested so many Australians do not receive any pension payments at all.
That’s why choosing the right super fund and managing your super money as soon as you
start working is essential.
At the moment, your employer pays at least 9.5% of your salary into a super account on your
behalf. But the trick is to take an interest early on―now. That way you can have the chance
to have more in your hand down the track. By using your super as a way of saving for
retirement, you may accumulate more than you might think. Because unlike many other
types of investments, super can be a tax-effective way of building wealth.
When can I access my money?
You generally need to reach preservation age (usually between age 55 and 60) before you
become eligible to access your super money. The date will depend on your birth month and
year―find out more in our superannuation jargon buster article. You will then need to decide
if you want to take your super as a lump sum. Leaving it in super will allow you to continue
earning interest.
1 2013 Deloitte Actuaries & Consultants, Dynamics of Superannuation projections, deloitte.com/au/en/pages/financial-
services/articles/adequacy-australian-superannuation-system.html.
2. How much do I need to retire?
There’s a different answer to this question for everyone.
The thing to remember is that once you’ve retired, the money you’ve accumulated in super
may still be able to work hard and earn money for you. So you don’t need 30 years’ worth of
income sitting in your account when you arrive at retirement.
But you may need more than you think.
The Association of Superannuation Funds of Australia (ASFA) estimates the lump sum
needed to support a comfortable lifestyle for a couple is $510,000 and $430,000 for a single
person, assuming a partial government pension.
The table2
below estimates annual and weekly living costs, based on retirement spanning
from age 65 to 853
.
Use our what’s my number calculator to work out how much you may need and then do
some salary sacrifice calculations to see the difference you can make using pre-tax dollars,
with little if any impact on your take-home pay.
What’s the best super fund for me?
When it comes to choosing a super fund, start by finding out why AMP is Australia’s favourite
for super4
.
2 ASFA Retirement Standard, March 2015.
3 moneysmart.gov.au/superannuation-and-retirement/how-super-works/super-contributions/how-much-is-enough.
4.
Plan for Life 30 September 2013.
