Contributing just 10 per cent more of your salary, in addition to your current contributions, to your superannuation plan can provide most people with an adequate income in retirement.
Contributing just 10 per cent more of your salary, in addition to your current contributions, to your superannuation plan can provide most people with an adequate income in retirement.
Below are a number of estimates which may help people plan for their superannuation requirements.
Scenario One1
An employee on $50,000 a year can expect to receive $145,000 from their superannuation guarantee (SG).
By contributing 10 per cent more of their annual salary they are able to increase this to a staggering $285,000 – offering a more comfortable retirement income of $21,0004 a year.*
Scenario Two1
For those on $60,000, the SG contributions can provide $170,000.
Additional personal contributions based on 10 per cent of this annual salary means a $335,000 lump sum for retirement or $24,5004 a year.*
Scenario Three1
And with a salary of $80,000, the SG will mean a balance of $220,000.
By contributing an additional 10 per cent of this salary you will double this amount to approximately $440,000 – funding $32,0004 a year.*
In 2000 only one third of all employed Australians were making additional contributions to their superannuation2. This means most people are just relying on the Superannuation Guaranteed contribution, currently nine per cent of salary, to pay for their retirement.
Research now suggests that an income of ‘at least $30,000’* a year is what most people want during retirement3. And for this, an investment target of at least $410,000*4 is necessary, for a retirement period of 20 years.
Shaun Williams, from Norwich Union Australia, says while this sounds like there is a big gap between what we need and what we have, adequate superannuation is an achievable goal for those who start to contribute extra to their superannuation early in their working life.
“Ten per cent of your annual salary really isn’t a lot of money,” says Shaun. “And it certainly will save you a lot of heartache in the end – retirement is supposed to be about lifestyle – and the key to that is certainly your retirement income.”
For someone on $50,000 a year, an extra 10 per cent contribution to their superannuation is less than a hundred dollars a week.
“Finding this contribution for your super might not make a big difference right now but it will during retirement. By making some sacrifices now you are helping to ensure you have a long and financially independent retirement,” said Shaun.
Shaun Williams is available for interview.
* All figures quoted based on today’s dollars
1Scenario figures based on: savings over a 25 year period, additional contributions by ‘salary sacrifice’, real gross investment earnings before tax of four per cent per annum, and salaries, contribution amounts and thresholds have not been increased for inflation. (A real rate of four per cent per annum compares to a nominal rate of seven per cent per annum with three per cent per annum inflation).
2Australian Bureau of Statistics, Income and Expenditure – Sources of Income: Employee Superannuation, May 2002, Canberra.
3The Association of Superannuation Funds of Australia Limited, An adequate retirement income, June 2001, Sydney.
4Invested at a rate of four per cent per annum , inflation nil, tax on investment earnings nil and 20 years of retirement assumed.
For further information, please contact:
Simon Morgan
Group General Manager Public Affairs
(03) 9829 8892
0407 966 632
Notes to editors:
- Norwich Union Australia is a group of two specialist financial services companies; Navigator and Norwich Union Life. Portfolio Partners, the Australian funds management arm of Aviva plc, is a sister company to Norwich Union. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
- Globally, Norwich Union Australia is part of Aviva plc, the world’s seventh largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is the worlds seventh-largest insurance group and the biggest in the UK. It is the leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$77.3 billion, and more than A$593 billion of assets under management (as at 31 December 2002). The group has more than 59,000 employees and 25 million customers worldwide.
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The information in this document reflects Norwich Union's understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended, to be comprehensive or a substitute for professional advice on specific circumstances.
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