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Book a FREE consultation
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Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.

How Much Super Should I Have?

Retirement Planning Your superannuation is your cornerstone for retirement savings, and understanding how much you'll need is crucial. Dive into our blog for expert strategies on contributions that can help you plan for the future.

Your superannuation is your key nest egg for retirement planning. It’s purpose-built to support you during your retirement years. When considering how much super should I have, it’s crucial to recognise that the figure that is right for you is deeply intertwined with your unique circumstances. Your age, income, lifestyle expectations, and retirement goals all play pivotal roles in determining your ideal super balance. So, while there are general guidelines, there’s no one answer that fits all.

Super Balance by Age

Understanding average super by age can give you a decent indication of how much you should have saved at different stages of your life. For example, you might wonder, “How much super should I have at 40?” or “How much super should I have at 50?” or even “How much super do I need to retire at 65?” The latest data from ASFA helps us see where the average Australian super balance is at different stages of life. Take a look and see how your current balance compares.

Super Balance by Age to refer how much super should I have
Source: The Association of Superannuation Funds of Australia, June 2021

These averages can serve as useful benchmarks but remember that everyone’s situation is different. Your financial needs and goals might vary based on your personal circumstances. That’s why it’s always ideal to assess your own financial situation, seek advice from a professional financial advisor, and set realistic, personalised goals for your superannuation savings.

How Much Superannuation Do I Need?

Here we have done some calculations for a 67-year-old couple with different income needs, to give you a more specific perspective on how much super you will need.

Calculations to determine How much super should I have for a 67-year-old couple based on different income needs.

If you consider this data, compared to the averages ASFA provides us in the previous table, it starts to help you see how well the average Australian couple is currently fairing.

  • For example, a couple wanting $80,000 p.a. is looking well positioned for retirement, when you factor in Age pension. But bump up the need to $100,000 p.a. and there is a big gap in what the average couple have and what is needed

Many people limit their retirement plans based on what they think they can afford, instead of starting with what they truly desire. So, to accurately answer how much super I should have, use this information as a general guide and take the time to assess your personal needs and circumstances.

How to Work Out Superannuation and Grow It?

Let’s explore different types of super contribution strategies that can help you grow your super balance and help to find out how much super you should have to bring you closer to your ideal retirement.

  • Employer Contributions

First up, we have the standard employer contributions. These are often referred to as the Superannuation Guarantee (SG) contributions. Your employer is legally required to contribute a minimum percentage of 11% to your ordinary time earnings into your super fund. For many, this is the foundational building block of their superannuation.

  • Salary Sacrifice Contributions

This is a strategy where you can choose to have a portion of your pre-tax salary paid directly into your super fund. These contributions are taxed at a concessional rate of 15%, which is generally lower than the marginal tax rate.

  • Personal Contributions

You can also make direct personal contributions to your super fund. These are contributions you make from your after-tax income and come with two options.

Tax Deductible Contributions: If you claim a tax deduction for these contributions, they become concessional contributions. This means they’re treated as pre-tax income and taxed at 15% in your super fund or up to 30% if you earn over $250,000 p.a.

Non-Deductible Contributions: If you don’t claim a tax deduction, they’re non-concessional contributions. These come from your after-tax income or savings and aren’t taxed again in your super.

Always keep an eye on the contribution caps for both concessional and non-concessional contributions to avoid extra tax. If you’re ever uncertain, it’s wise to seek expert advice before making any super contributions.

  • Superannuation Co-Contributions

If you’re a low or middle-income earner making personal after-tax contributions to your super, the government might give your super a boost with a co-contribution. You don’t need to apply for this; when you lodge your tax return, the government will check if you’re eligible and automatically pay the co-contribution into your super.

For example, if your total income is $43,445 or less in the 2023-24 financial year and you contribute $1,000, you’ll receive the maximum $500 co-contribution.

Like all contribution strategies, this one has its own eligibility criteria and limits. So, before you make any moves, be sure to understand all the ins and outs.

  • Spouse Contributions

This strategy is particularly helpful if your spouse (married or de facto) is a low-income earner or currently not working. It’s a great way to ensure both of you have a healthy super balance for retirement. This can be done in two ways;

Contribution splitting: This involves moving a portion of your own super contributions into your spouse’s super account. You typically apply for this after the end of the income year. This is treated as a super rollover and not as a new contribution. It’s important to note that this process doesn’t change your contribution caps or affect any tax deductions you may be eligible for based on your contributions.

Tax Offset for Contributions: This refers to making voluntary after-tax (non-concessional) contributions into your spouse’s super account from your own after-tax income.

If your spouse’s income is less than $40,000 per year, you can get a tax offset of up to $540. The offset reduces if your spouse earns more than $37,000 and stops at $40,000.

To qualify for this tax offset, both you and your spouse must meet specific eligibility criteria, including residency and age requirements. It’s important to note that you cannot claim this tax offset if you’re transferring your own super contributions to your spouse’s account.

  • Catch-Up Contributions

If your super balance is less than $500,000, you can carry forward any unused cap amounts for up to five years and make additional concessional contributions (pre-tax). This provides flexibility if you have taken a career break or with varying income levels and now want to boost your super.

Putting It All Together

It’s all about finding the right balance that fits your financial position and retirement goals. We understand how hard it may be to wade through all of these strategies and eligibility requirements. So, if you have any uncertainties before making a decision, don’t hesitate to speak to a financial advisor. At Yield, our advisors have helped many individuals like you figure out how much super they would need based on their own goals and situations. Reach out to us today and get started on your financial journey.

 

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Important Note
Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.

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Free Consultation
Cover page of the Good Fortune Guide

Free Consultation

Get started with a free strategy consultation and receive a copy of the Good Fortune Guide – written by James McFall, Managing Director Yield FP and 2020 National Finalist Certified Financial Planner of the Year to help educate you on your Financial Plan.