We were asked by Advisor Ratings about what is the best tool to calculate your superannuation to establish what your retirement fund will look like. This is an incredibly important question as everybody has super, but depending on a variety of factors, will retire on vastly different amounts.
There can be a lot of competing information about what is the best strategies and tools available for your retirement fund. Competing information on aged care and superannuation can come up short of an answer to the simple question; what will my retirement fund look like?
When you’re seeking to define a target lump sum for your retirement fund, there are various calculators and projection tools available to help, such as the Australian Government's moneysmart calculator.
When assessing your retirement fund, it’s important to understand that these calculators will:
- Estimate your life expectancy based on data from the Australian Bureau of Statistics, then
- Factor in an assumed rate of inflation and return on investment, to
- Create an estimate of the lump sum you will need.
We suggest you take this further:
- First, build some fat into the numbers by projecting beyond your life expectancy.
- Understand your personal position. Will Centrelink be payable? How could that influence the longevity of your funds?
- When can you access your super?
- Being clear on an appropriate investment strategy is another critical point, given different levels of risk will equate to different returns and levels of volatility.
Ultimately, most people are not in a financial position to achieve everything they want in retirement so it is necessary to prioritise what is most important to you.
Write down and work through all the options that are available to you, so that you can make a retirement decision that you are empowered by and feel comfortable with.
Calculators such as you are using are good to experiment with, however, I do not think you will get the personalised and more accurate projection you are after. At least none that I am aware of that are publicly available for download.
Experiment with this simple-to-use calculator from ASIC’s Moneysmart, to work out your possible income and how different factors such as contributions and retirement age affect your income from super.
Yield Financial Planning Is Here To Help
If you are interested to do a deep dive into ‘how much do I need to retire', we’ve written this as a comprehensive blog here.
If you would like to speak to about quantifying the lump sum you need for retirement, feel free to tee up a complimentary initial conversation.