Disclosure

Results are shown in today’s dollars, which means they have been adjusted for the effect of inflation over time. We have assumed a default rate of inflation of 3.5% over the life of the model.

In simple terms, $1 today will not have the same purchasing power as $1 in the future, as goods and services typically cost more over time. The figures in the above graph are shown in today’s dollars to make it easier for you to compare the amounts against today’s living costs.

The estimated retirement income is calculated on the member’s superannuation balance at the start of retirement. The calculation determines how much can be drawn each year (in today’s dollars) for the superannuation balance to run out 5 years after the member’s life expectancy (figures provided by the Australian Institute of Health and Welfare), and assumes no other sources of income (e.g. income from non-superannuation assets or Centrelink benefits).

Assumptions

Starting Age: 25

Retirement Age: 67

Starting Balance: $5,000 which comprises the rollover from other super funds 

Salary: $50,000 pa reduced by 50% when working part time

Superannuation Guarantee: 9.5% (no SG during parental leave taken over 3 full years from age 35)

Salary Indexation: 3.5% pa 

Salary Sacrifice Indexation: 3.5% pa

Inflation: 3.5% pa

Investment Option: 100% of account balance invested in: Growth (FutureSaver) returning 6.25% pa from 25 to 67 years of age. Capital Stable (Flexible Income) returning 5.30% pa from 67 years of age

All information provided in this illustrative case study is based on the specific circumstances and assumptions detailed, and is not intended as advice or a guarantee of any outcome. It is a broad illustration of the steps a member could take, but the actions appropriate for an individual will vary depending on their personal circumstances. The case study is based on current regulatory requirements and laws, including tax rates, which may be subject to change.

Investment return assumptions are for illustrative purposes only and for simplicity assume an average rate of return each year throughout the investment period. Actual returns year on year may be negative and may vary materially.

Other assumptions

It is assumed that Tamara’s birthday is 1 July each year.

No withdrawals are assumed to be made from the super account until retirement.

Investment earnings are assumed to be applied to the starting balance each year, and credited to the closing balance annually.

Contributions are assumed to be made in the middle of each year.

Fees and taxes are factored into the assumption for the net investment return, this includes:

• Investment Fee – based on the Investment Option the member is invested in and calculated as part of the unit price (not directly deducted from a member’s account).
• Account Keeping ($1.50 per week) and Administration Fees (0.19% per annum) – capped at a combined total of $125 per month per account, deducted monthly in arrears from a member’s account.
• Indirect Cost Ratio – based on the Investment Option the member is invested in and calculated as part of the unit price (not directly deducted from a member’s account).

No deductions are assumed to have been made for any insurance premiums.

Using the starting account balance and salary, the contributions, earnings and fees are calculated using 30 June data each year to derive the closing account balance at the end of each year. The closing account balance for the previous year is then used to calculate earnings and fees on the account in the following years with the process being repeated for each year.

1. Receives a Welcome Pack and registers for Members Online
2. Starts salary sacrificing $50 gross a fortnight
3. Speaks to our Member Centre about consolidating her other super accounts and does this online

1. Stops salary sacrificing while on parental leave
2. Returns to work part-time at 38 years of age on half pay - no spouse contributions as she is ineligible due to level of assessable income
3. Attends a VicSuper workshop and reads VicSuper booklet showing different types of contributions, then restarts salary sacrifice contributions from approx $78 gross per fortnight

1. Back to full time work at 45 and Salary Sacrifice contributions increase as per indexation
2. Uses Beeline to understand how paying down their mortgage vs saving for retirement

1. Speaks to a Financial Planner to talk about her retirement plans now that she’s paid off her mortgage and other debts
2. Increases salary sacrifice contributions to concessional cap