Financial Tools
  Client Portfolio Access
  New Client Kit
  Enquiry / Seminar Registration
Hot Issues
The little-known rule with huge implications for self-managed super funds
Grappling with the uncertainties of retirement
Change to ATO decision relevant to SMSF in-house assets
Taking a personal perspective on the global super challenge
Some terms defined - Super & Investment
The perils of market-timing and over-confidence
Market Update – 30th September 2014
Hardly a do-it-yourself job
Super insurance: wide coverage, limited understanding
Good financial planning finally has a value: 23% more in retirement
ASIC eyes SMSF loan sign-off
Redesigning retirement incomes policy - from the ground up
Industry terms
Market Update - August 2014
Keeping to super's sole purpose
Taxing times for self-managed super funds
The relationship between SMSFs and their advisers
How family financial planning opened the door to a holistic advice career
Spotlight on your retirement income
Market Update - July 2014
The new 65?
Report reveals 'alarming' super savings stats
Anchors aweigh!
A retiree's choice: super pension or lump sum
Articles archive
Quarter 3 July - September 2014
Quarter 2 April - June 2014
Quarter 1 January - March 2014
Quarter 4 October - December 2013
Quarter 3 July - September 2013
Quarter 2 April - June 2013
Quarter 1 January - March 2013
Quarter 4 October - December 2012
Quarter 3 July - September 2012
Quarter 2 April - June 2012
Quarter 1 January - March 2012
Quarter 4 October - December 2011
Quarter 3 July - September 2011
Quarter 2 April - June 2011
Quarter 1 January - March 2011
Quarter 4 October - December 2010
Quarter 3 July - September 2010
Quarter 2 April - June 2010
Quarter 1 January - March 2010
Quarter 4 October - December 2009
Quarter 3 July - September 2009
Quarter 2 April - June 2009
Quarter 1 January - March 2009
Quarter 4 October - December 2008
Quarter 3 July - September 2008
Quarter 2 April - June 2008
Quarter 1 January - March 2008
Quarter 4 October - December 2007
Quarter 3 July - September 2007
Quarter 2 April - June 2007
Quarter 1 January - March 2007
Quarter 4 October - December 2006
Quarter 3 July - September 2006
Quarter 2 April - June 2006
Quarter 1 of 2008
Articles
Good times to return, date to be advised
Fed offers $US100 billion more to banks
Reality strikes.
Wash Sales
Investment Markets Data - To 29th February 2008.
Face the reality of super savings
Inflation tipped to stay above target.
Tax Changes under Labor
Investment Markets Data - To 31st January 2008.
Market Update.
How investors will be impacted by a Rudd Government
Stage two of the super revolution.
Investment Markets Data - To 31st December 2007.
Face the reality of super savings
 

By Robin Bowerman
Smart Investing
19th February 2008
Principal & Head of Retail, Vanguard Investments Australia


The Association of Superannuation Funds of Australia (ASFA) has produced some fascinating figures that starkly illustrate why Australians should not rely on superannuation guarantee (SG) contributions to provide what many people would consider an adequate standard of living in retirement.

This is the unfortunate reality even for those with many years ahead of them in the workforce. (See Smart Investing, February 14, for more discussions on the latest ASFA research on super savings.)

Say you have a current salary of $75,000 have 30 years to go until retirement.

ASFA calculates that, based on certain assumptions, you will need to make voluntary contributions of 14% above the 9% SG contributions to reach have an annual income in retirement of $45,000 a year in today's dollars - even when including a part age pension.

And a fund member, again earning $75,000 a year, with 35 years until retirement will need to contribute 10% a year above 9% SG contributions to reach an income of $45,000 in today's dollars. Again this includes a part age pension.

The assumptions used by ASFA for its calculation should be carefully noted, particularly as personal circumstances can differ so much from individual to individual.

It is assumed that the members have no super savings at the start of the periods until retirement (30 and 35 years). And it is assumed that the super funds earn 7% a year after taxes and investment management fees.

The voluntary contributions used in the calculations are by salary-sacrifice and subject to the standard 15% contributions tax.

The key message is not to make the mistake of believing that SG contributions are enough to adequately save for your retirement. Voluntary contributions should be made even if you have 40 years or more until eventually leaving the workforce.

ASFA says that a married couple with their own home would need an income of more than $45,000 a year for a standard of living that many would find acceptable. It tags this as a "comfortable" lifestyle for retirees.

This standard of living would require super savings of about $500,000 a year plus a part age pension, according to ASFA.

 

 



22nd-February-2008

  Financial Advisor | Financial Planner | Financial Adviser | Financial Planning | Financial Planner Sydney