Hi Leanne, thanks for your email. I love talking about superannuation and as a nation we are definitely under-superannuated. There is no short answer to your question, as it depends on other financial matters such as whether you own your home, whether you have other investments, whether you are likely to inherit money from your parents or other family members etc. My comment is, as always, obtain professional advice. The information below may also be helpful.
For your age group (50-54) the average balance for women is $84,228 and for men is $146,608. These figures are for the 2013/14 financial year. So it is fair to say that you are well above the average. In fact, for women, the average balance is only $138,154 at retirement! Men average $292,510 at retirement. Hence my concern about Australians not retiring with sufficient assets to live well.
These figures, of course, in some cases may not tell the whole story. Some people have investments outside superannuation (chiefly bank accounts and investment property, and also some direct share holdings) which may support retirement income.
The problem is greatest for single women, such as you, Leanne (and me). If you add together the averages for men and women at retirement the total superannuation balance of the ‘average’ couple is $430,664. This provides a reasonable amount of money when taking the age pension into account. I have had some clients manage a lovely lifestyle on this amount of super, but they are well disciplined and have very definite priorities about how they spend their money.
For single people, there is only one lot of super from which you can provide a retirement income. The greatest problem is for women, who generally have an even lower balance than men. Of course, individual circumstances vary. It is important to note that it is only money which has come from superannuation that can provide a tax free income in retirement (after age 60). Anything else provides income which is taxable. If you have an income of $100,000 in retirement, you will lose $26,947 in tax and Medicare levy if this income does not come from a superannuation pension.
So here are my tips on some fairly painless strategies to build up your super.
Start young! Whatever your age, today is the youngest you are ever going to be.
Contribute regularly. If your cash flow is limited, a small amount each pay may not make a world of difference to your budget but can make a lot of difference to your retirement benefit.
If your marginal tax rate exceeds 15% (that’s almost everyone who is working) make some concessional (pre-tax) contributions to super. It’s important to remember that you can only have concessional contributions of $30,000 if you’re under age 50, and $35,000 if you’re 50 or over and eligible to contribute. This includes all employer contributions. If you’re employed, you can do this by salary sacrifice. If you’re self-employed, you can claim any contributions, up to the cap. If you have your own company, you can make employer contributions from the company.
When you are getting close to retirement, try to have all your investments inside super.
Obtain professional advice before you do anything.
Super is complex and you may make a costly mistake if you try to manage it yourself. For more information, please contact your financial planner or phone me on 9452 7871.
Any advice in this publication is of a general nature only and has not been tailored to your personal
circumstances. Please seek personal advice prior to acting on this information. Opinions constitute
our judgement at the time of issue and are subject to change. Neither, the Licensee or any of the
National Australia group of companies, nor their employees or directors give any warranty of
accuracy, nor accept any responsibility for errors or omissions in this document.
Plan Protect Pty Ltd
Phone: 02 9452 7871
Address: 14 Rodborough Rd, Frenchs Forest.
Authorised Representatives, Godfrey Pembroke Limited
Australian Financial Services Licensee
105-153 Miller Street, North Sydney NSW 2060