Superannuation

 

Indicative guide to calculating contributions needed for retirement

The following guide shows approximately how much of a person’s current salary will be needed to contributed to super, based on current age and depending on the final super retirement income expectations.

 

Table 1

 

 

Current Age

 

 

25

30

35

40

45

50

Retirement Income required as a % of salary

 

Contributions as a % of salary

50%

10%

12%

16%

20%

27%

38%

60%

12%

15%

19%

24%

33%

46%

 

 

Assumptions:

"retirement age is 65 " net earning rate 7.5% pa " tax on contributions 15% " salary growth 5% pa " joint life annuity with 67% reversion to spouse of equal age.

 

Table 2

Current Age

25

30

35

40

45

50

Adjustment Factor

4.5%

5%

5.5%

6%

7.5%

9.5%

 

 

Step 1. From Table 1, select the "Contributions as a % of Salary", based on the current age and the percentage of salary on which a persons wishes to retire.

Step 2. From Table 2 select the "Adjustment Factor" based on current age

Step 3. Multiply the above percentage by the current amount in super.

Step 4. Take the figure in Step 3, divide it by the salary and multiply by 100.

Step 5. Subtract the final figure in Step 4 from the starting figure in Step 1 to arrive at the adjusted contribution level.

 

Source: Mercantile Mutual.