I've just turned 40 (female) and feel like I should be thinking more about the next phase of my life and Superannuation has been on my mind. I have just changed to another fund from always being in an industry super fund and I am hoping this one will do better for me.
My balance worries me a little, I have done some comparisons and although it says my balance is a little higher than average ($130k) I still don't believe that I will have enough.
Does Your Superannuation Balance Worry You?
ELH05 on 04/06/2019 - 13:17
Comments
GFC II might be around the corner… Would probably be MGFC or something
The problem is in 20 years. The mark required will be closer to 2 million than 1 mllion. The costs of living are not static.
CPI is less than 2%, doubt you need 2mill in 20yrs time
I'm mid 40s and have definitely been thinking about this of late. I think it's normal to some extent to reach this age and be thinking about the next step and of course part of that is trying to answer the question of do I have enough to live on and that is a hard question to answer so it's also normal to have some concern.
I do think it's a good idea to speak to a professional about it. I know I've made some adjustments over the past year after discussing it which have had positive impact but I do still have some level of concern and think I always will regardless.
Your balance is actually well above both the mean and median for your age and gender
https://www.superannuation.asn.au/ArticleDocuments/359/1710_…Though you are right, it is entirely possible you won't have enough depending on what your expectations are for the age you retire, what housing you will have and what disposable income you want in retirement.
There are calculators out there to help you work out if you need to increase your contributions etc e.g. https://www.moneysmart.gov.au/tools-and-resources/calculator…
Thanks for the links above - very helpful !
Great link! I have well above my age and gender bracket but it's a bit low for my income bracket. I need to put more in I think, I only managed to salary sacrifice the max last financial year.
Yes, my balance concerns me.
When my mortgage is paid, I'll be slogging much more into super. And getting some advice from a professional.In the meantime, I am managing where my money is invested via my industry super website. i.e. instead of just accepting the default investments I've tweaked it so that my balance is invested in higher-earning streams. I check it every 6 mths or so & adjust to chase the greatest returns using a rough comparison between past 1/3/5 year performance.
Problem is you get taxed 15% on the way in.
Super contributions should be tax free but instead government needs to keep retirees with franking credits happy
That is why you salary sacrifice and save on your marginal tax rate which could be as high as 47%.
Or make voluntary super payments and claim back a tax deduction for the same effect
Still taxed on the way in
My point is voluntary super contributions should be tax free (up to a certain amount & bigger than current cap).
Instead millions of Australian workers need to prop up seniors getting tax back for no good reason
@chumlee: Yeah, it would have been good to get rid of that, but they'd need to grandfather (no pun intended) it.
A lot of those retirees are financially illiterate and just did what professionals told them.
They're now relying on those tax breaks to sustain themselves.
IMHO this is hugely complex as it requires a crystal ball see the future…..things to be considered - how many people to be covered…hubby? kids? (I have ended up with 2 kids over 21 still at home - extended after school study), health (of all dependents), potential ability to travel, house (owned or not), parents to look after, lifestyle you want and probably many many other items.
Here is NOT the place to properly cover this - with all respect to helpful posters.
I can only say a good, independent financial planner is needed.
I had a low super balance at 40 and had the same epiphany you are having now.
I started maxing out super contributions by salary sacrifice for both wife and I and now happy where we're sitting.
You need to feed your super if you want it to grow.
Can I ask roughly where you're sitting, age and balance wise? I've been contributing the max for some years now, but don't feel happy yet.
Before getting advice from any professional, read the book Barefoot Investor. As per the book, best super fund are Hostplus and Australian supper because of higher returns and low admin fee.
I've just moved everything to Australia Super so hoping that the returns are better with them than my previous fund.
Also, he debunks the myth that we all need $1M to have a decent retirement. It's like many things to do with money : what you need and what you think you need are different things. None of us wants to be wholly dependent on the whims of the public purse, but all of us can think about quality of life v. an imperative to keep accumulating.
For those far away from retirement, what you estimate will be your balance might not be as good as it seems as you'll also need to factor in inflation.
So in the OP's case being 40 now, if she retires at age 65, assuming an annual inflation rate of 3%, if in 25 years' time she has a $1M balance (2044 dollars), in 2019 dollars equivalent, that's only equivalent to about half that or $500K.
And also the increase in oldies with superannuation will push up prices for old person services and healthcare. There are whole waves of people with similar super savings and prices will rise to exploit it.
I see Super as a top up.
I would hope by the time I retire, I will have paid off all outstanding debts, with enough passive income to live off.
I know I will not receive any help from the government as I will likely fail the assets or means tests.
My Super won't be $1m or close to it but I think the most critical thing is to be debt free by retirement. Even if you live on the Age Pension it is enough to live comfortably when you have your own house.
Not saying Super is not important, it is, but provided some other conditions are met then Super won't be the be all and end all of retirement.
Even if you live on the Age Pension it is enough to live comfortably when you have your own house.
The age pension, by the time you and I retire, won't be anything like it is today. That is the entire point of superannuation - it was put in place to deal with the fact that the pension (as it is today) isn't sustainable - since people's life expectancy is so high, and the ratio of workers to retirees has dropped and will continue to do so. As such, the appropriate mental model (long term) is not that superannuation will be on top of the pension (for most people) but will be instead of the pension.
That is all true about paying off debts, having "passive income" (from investments etc), but it does miss the most important point about Super.
Whatever you end up with in your super pot, whether it is $100k or $1m or even $1.6m, can all be drawn down Tax Free in retirement.
As things stand today, if you have passive income from "non-Super" investments, the moment your income exceeds $18,600 per annum, you pay tax.
Everything that you have inside your super pot comes to you tax free.
As I understand it, that is the main, perhaps only reason for having super.
That is until the next scummy govt starts trying to fiddle the books and changes the rules.
If I had more super, it just means the fund would have lost more
I am surprised that you switched out of an Industry Fund into a Retail Super fund. The way that I understand it, retail funds need to charge higher fees. I believe that if you found a Retail Fund with better net returns (after higher fees), then it has been taking higher risk investments and you are not comparing similar investments by both. I am no expert, just my opinion. This may be of interest:- https://www.canstar.com.au/superannuation/industry-vs-retail…
Also beware of seeking financial advice from an advisor who will get a financial benefit from putting you into a certain fund.Only for a start my premiums for death / tpd insurance are actually less from Australian Super - so that's already a win for me.
Any savings you get on premiums are likely lost on extra fees to the retail fund.
What is your family situation? Are you married? Have kids? Own a house? I ask since that influences how much, if any, insurance you should have.
My personal view is that $130K is on the low side for a 40 year old (but it is dependent on so many factors - if you took time off to stay at home with kids, or you own a house (no debt) then it isn't bad etc). You may wish to contribute extra into super for the next 10 years or so to increase the balance.
Australian Super is actually an industry fund, so you switched between two industry funds. I think it's a good move, I've been pretty happy with Australian Super so if they don't pull any shenanigans (raising fees) it should be a relatively safe choice.
I've just hit 100K in mine. Am 31. I have slight concerns it won't be enough, especially as I feel unlikely to be able to buy property.
Bang your amount and age and super deposits into a compound interest calculator like this
https://www.moneysmart.gov.au/tools-and-resources/calculator…
Then read the Barefoot Investor for common sense savings/wealth management advice.
Im in my late 50's and should be ok but only got onto this book 6 months ago, wish I had of read it earlier.100K for a 31 year old is likely fine.
Compounding definitely works in your favour at 31.
That's pretty damn good. I'm turning 30 soon and only have $45k
Not too bad I'm 37 and have $260k in super but i contribute extra up to around the cap. Even then i still panic i won't have enough. Unfortunately there is no crystal ball.
I'm way off retirement age, but in looking after my grandma, who has a very healthy super - she simply has more money than she knows what to do with. She hardly needs any money at 72, her routine is tea, biscuits, a little whisky, some fish, walking the dog, and regrettably watching commercial news programs.
Not everyone will take up such a simple lifestyle upon retirement, but if you own your own home outright, I think you would be surprised how comfortable you can be on 20-30k rather than "80% of your working salary".
high risk high reward. all into s&p500 y0lo
That's low risk compared with what most Aussies do:
- 1 country (Australia)
- 1 asset class (Real Estate)
- 1 -5 individual assets (properties).S&P500 is already pretty diverse:
- While it's technically 1 country (USA), those huge companies operate across the globe, so you've got plentry of international exposure anyway.
- It's 1 asset class (equities)
+ It's hundreds of individual holdings which is good.
Smash your super as much you can afford.
Hmm I’m 39, female and I have less than you in super. My plan is to buy more property as I don’t see that the super I’m slowly accumulating is going to be enough for me during retirement, at this ripe age of 39 I’m seeing super more like play money, or to buy a nice merc.
you do realise that historically the share market has always outperformed property in the long term… the last 10yrs for Sydney/Melbourne have obviously been an exception but that wont continue.
I think it's an Australian thing. Property is often seen as safe and "they only go up", but yea…shares are what I'd be investing too.
Not an expert in investment, but thought I'll contribute to the discussion.
I thought that property is a "safer" form of investment than shares because it is tangleble, hence the lower return.
But the benefits of property is the leverage you can have. i.e. The loan you get assuming a 95% LVR gives you 20x the asset to play with. So if you have 20k, you have a 400k of asset to benefit from (though not yours yet but you reap the benefits of the appreciation, the additional income from renting it out)
On top of that with the negative gearing (which only exist in Australia, Japan and a few countries) makes it a pretty good form of investment. That is ofcourse assuming the property is an investment property and yourself is not living there.
Again, not an expert, but would love to discuss further to learn more
I'm 39, male and just checked my super due to having to make ATO payments yesterday (mutter grumble) and I have around $140k*. So we're not that different :)
*We also have an investment (unit bought off plan) through super though so that figure may not be realistic.
I'd suggest you speak to a financial advisor to try to maximise super contributions if you're worried about it. Personally I'm not fussed, I'll either enjoy myself now and if needed being done nursing home or another… Or got to the kids into looking after me. (I can hope)
Unfortunately most of us will be dead before we can use it anyways
Average life span of 82.5 years.
Retirement age of 67 in 2023.
More than 50% of people will definitely be using it buddy - best to start looking into your finances.
The age does seem to be a slippery slope. Working till I'm 67… Sounds exhausting.
After the royal commission, financial planners will now need to hold a degree. That said, a degree doesn’t make you an ethical person or anymore knowledgeable about finances. By all means get some advice, but like finding a tradesman, suggest getting a few opinions. I’ve always enjoyed reading commentary, books from Noel Whittiker, very knowledgeable on financial stuff, saving strategies, goals.
Finally, that 1 million figure is very arbitrary and pointless. One has to ask what you may think or perceive your lifestyle will be like when you retire. Will you live frugally, modestly, watch your pennies, still enjoy life, but not necessarily need to live flamboyantly or need to go overseas each year, own a flash car, etc. Will you still have debt or be debt free?My only suggestion is that if you have a mortgage, pay it off first.
"A man who has never gone to school may steal from a freight car; but if he has a university education, he may steal the whole railroad” is credited to Theodore Roosevelt.
Get some advice for a professional but i'd suggest get them to do a full review as if you have any assets i.e. investment property or share, they will be able to help on tax advice. They are professional and i'd suggest listening to their advice but at the end of the day only do something you are conformable with
I'm 42 and I barely have 70k in super, no home either. And no wife!
Can't see how I can have home and a healthy super in ~25 years time. One way is to purchase a cheaper home and pay off but that needs 25 years of hard work too.
Just something to think about if you’re considering an old apartment will be a cheap way of owning a place to avoid renting in retirement. Body corp is an extra expense house owners don’t have. I’ve known a few old couples who let their houses run down over 10-15yrs avoiding the expense of maintenance. I knew one old lady who had floor boards missing in her kitchen due to rot, but the house still sheltered her, and out lived her before it was demolished. With apartments you can’t let decay because of body corp.
My body corp/rates come to 1/3 the rent of these basic apartments, though in a nice end of town. Of course mileage may vary depending where and when. Though it’s still better than renting.
do you pay much in tax? have savings for a deposit? I'd look at buying a house/unit/townhouse in regional Australia look for a place with Hospital and has employment. you can rent out now, pay it off and you can move in when you retire.
I'm in a similar position, 39yrs, 55k Super ish & no home or wife…just a cat :)
Things could be better but there is still time to make real change I believe. The govts new first time home buyer initiative is a god send! Only need 5% & for me, hoping to get end of next year.
As for Super, I'm currently with my works MLC fund, who are now moving to AMP (!), both are dreadful companies. A lot of people when they change Super, as highlighted on here by some, move hoping it will return better but unless you're more involved its a risky approach i.e. Any Super you join will put you in their mainstream Default Balanced fund. Sounds good? But when I looked MLCs breakdown of a 'balanced fund', its about 29% defensive assets, which for my age/balance is wrong. While Hostplus Balanced is a lot more aggressive but also the best performing fund.
My approach is that I will join HostPlus & probably go 100% equities for the short/medium term.
Still time to act mate.
Retirement is a personal thing and really depends on the life style you want to live at a minimum i'd say btw you and your partner you would want to go into retirement owning your own property.
I reckon you 'could' live relatively comfortably if you own your own property (no loans no other debt) and get the 300~(Couple), 400~ (Single) a week from the aged pension
However if you want the kind of retirement where you go on a nice holiday every year, eating out a fair bit, enjoying social outings etc then you probably would want too have at least a million in super by retirement if you get ~10%pa return on your super fund that is around 100k a year
It is all relative but 130k isnt bad and i wouldnt be surprised if you end up with 400k in your retirement you would be eligible for a part pension (i think) and at 10% you would be looking at 40k of returns pa from an average low cost industry super fund with the part pension you could have a nice retirement assuming you have no other debt
NOTE: Take this advice with a gain of salt i am not a financial planner and my advice is always to seek professional financial advice
This thread prompted me to look back at my balance, which I've been tracking for nearly 10 years now.
I'm 35, though it's required constant contributions and salary sacrificing along the way. No kids in the picture yet, but I have travelled, bought real estate and funded wedding & honeymoon over this time.
Fin Yr, Bal, Salary Sacrifice
2010, 30K, 1K
2011, 40K, 1K
2012, 50K, 1.5K
2013, 71K, 2.7K
2014, 96K, 3.6K
2015, 125K, 6.2K
2016, 136K, 4.8K
2017, 167K, 4.8K
2018, 198K, 3.5K
2019, 221K, 4.2KI was in a government super scheme (PSSap) up until 2015 so I 12 getting 15.4% contributions, currently have it in HostPlus Balanced Index and get the standard 9.5% now.
That's a good position to be in at 35. I'm 42 and sit around a similar number…likewise with Hostplus mix of balanced and int shares. I'm salary sacrificing too up to the $25k mark inclusive of employer contribution. Moving forward I'm going to focus more on my wife's balance to gain greater benefit from the 50% govt contribution and partner tax offset.
Any info on this somewhere?
https://www.industrysuper.com/understand-super/tax-and-super…
https://www.industrysuper.com/understand-super/tax-and-super…Hopefully that was what you were interested in
How does the salary sacrifice thing work with super exactky? Do you have to have a specific job/wage etc or can anyone do it?
It's topping up super with your 'pre-tax' income….so rather than being taxed 30-37% on your salary and then contributing, instead your tax around 15% when you add it straight in to super.
And you can do it now with post tax dollars then claim the tax deduction which makes it the same as pre tax. It’s a convenient way to do it now.
Honestly people shouldn't rely on super being their main asset (besides a house) when they retire. People should realise that saving and investing outside of super during their careers is extremely important.
You still have 25 years to do that, so I'd suggest you make the most of it.
To the contrary.
What other investment vehicle will allow you have assets of up to $1.6m in a tax free environment.
Tax free earnings and tax free when you withdraw it?
I never said super wasn't good in terms of tax breaks. You're right in that it is good in terms of the tax advantage you get from it.
What I am trying to convey is that if you don't save and invest outside of super (hell, do it into super if you want because of the tax breaks — but realise you might not be able to access it if you want to retire early nor is it likely the age you can access it will remain at 65 or whatever it is currently) then you come to where the OP is and start to shit yourself wondering if you have enough money for retirement (realising you'll probably live to at least 80).
If people are going through their lives thinking "super will be enough for me" they're going to be wrong. Then again I don't want to live in poverty or rely on government handsouts when I retire so that's why I've said what I have.
60, right now.
But will to be 60 in 25years time… who knows?@JimB: Sure. But it is currently 60 for the OP.
And most likely to increase. Although I think aged pension age is likely to increase first.
You're correct to say non-super assets are important, however it should the #1 vehicle for your long term retirement needs purely for the tax breaks it provides.
That's not to say non-super assets aren't important, it's the only way to leverage and negative gear but for the vast majority of people super is an excellent investment.
Earnings are concessionally taxed while you are working and tax free when you are retired.
@JimB: Once again, I never said super was bad. My entire point is that there are people out there who go through their lives thinking "super will be enough for when I retire" when it clearly is not the case for everyone, especially those who have a low balance.
"People shouldn't rely solely on super"
"Super has good tax breaks"It's missing my point completely.
You shouldn't worry about your super balance. By the time you're allowed to use it, the government would have pushed the retirement age well beyond 85.
Salary Sacrifice or claim a tax deduction (which you can do under the 'new rules') as much as you can afford up to $25k/year; just make sure you can take one OS holiday per year at least.
Salary sacrifice as much as you can, you more than likely will appreciate it later, if earning over the 19% tax rate. You can do this yourself now then get the tax back later on, or do through your payroll.
Instant 19.5% return
Your balance is reasonable though, I wouldn’t panic (yet)
*General advice only
Retirement is subjective. There is no right or wrong answer. What is enough for you might not be 'enough' for somebody else.
As a guide, you can refer to the The Association of Superannuation Funds of Australia (ASFA) retirement guide
https://www.superannuation.asn.au/resources/retirement-stand…I know people that are comfortable living on the government Age Pension of $1,396.20/fortnight^ ($36,301.20pa)per couple. But I also know people comfortable living on double if not triple that amount. I think you really need to understand what type of retirement you are after. You might want to ask yourself some of the following questions. (bear in mind the more you want, the more $$$ you need in retirement)
-Where will you live in retirement? Will you have paid off your house or still be renting?
-Are you after something that's barely scraping through with homebrand groceries or happy to spend abit more for all the years of hard work?
-Would you like the ability to indulge in dinning out/take away on a regular basis?
-Are you wanting domestic/overseas holidays regularly?
-Would you like to preserve capital in retirement to pass onto somebody or happy to spend it all?Hopefully this enlightens you that your situation isn't all doom and gloom. The Retirement Average is just the mid point; doesn't mean its suitable for everybody. Retirement is a balancing act of the needs and wants. Unfortunately there's no free lunch. The more you want, the more you will have to sacrifice to get there; unless you are lucky enough to win Tattslotto or receive an inheritance.
^Based on rates 20 March–30 June 2019. Inclusive of energy and pension supplements for a combined couple (ie two people receiving Age Pension)
Good link you've go there, which emphasises:
Both budgets assume that the retirees own their own home outright and are relatively healthy.
Just so you can compare I am 45 and I have 450k in my super. My wife is 40 and has the same as you. I did salary sacrifice my super for 10 years. The kicker was my employer matched contributions on top of what they normally pay so I was getting over 20% super contributions for over 10 years. That was 8 years ago when I left this employer.
Also my super allows me to select how I want to invest my super eg shares, property, cash etc. This can make a big difference.
That amount of super at that age will be substantially above the national average.
A great achievement, for sure, but not achievable for all.
Not at all. Im simply working until I die. I can honestly see it that way. Sitting at a desk then it's all over.
before or after lunch break
To paraphrase the comedian stewart francis, I've got more than enough to live on till I die. So long as I die by next Tuesday
I thought I was going well with my super till I read some of the replies in this thread :(
Just remember a lot of Ozbargain members are not people who need a bargain. Lots of right wing conservative young boomers with investment properties going by threads the past few years.
Yea, ozb has a lot of high income asians. I don’t get it personally.
Who pays retail price on things or don't minimise their tax obligations (there's a clear distinction between that and tax evasion) need their head checked. That's got nothing to do with income level or cultural background.
Let me throw some stereotypes at you:
- Asians generally study hard, it’s a cultural thing. Doing well in studies generally leads to higher incomes.
- Asians are generally savvy with money.
- Ozbargain can be useful for finding a good deal, to enable said savviness.
- Therefore it is not surprising that Ozbargain has lot of high income Asians.@john_conner: I didn’t say it was surprising, it’s just strange to me. If you are on a high income, why are you spending your time to save $5 here and there, it’s silly.
The argument that having a lot of immigration is good for the economy because immigrants buy a lot of stuff doesn’t vibe with lots of savvy asian immigrants buying everything on sale hahah.
@Emerald Owl: I agree it’s silly spending 30 min trying to save $5 when your time is worth much more than that. I am certainly guilty of that - I guess it’s just habit and a hobby (if you can call it that!). Eg. once poor and saved as a necessity but when more wealthy still have uni student habits.
I guess people need to buy things, and having more people means more demand - even if you only buy things on sale. Immigration has been the centrepiece of our miracle Victorian economy!
Many of the Asian immigrants are loaded and probably don’t care too much for bargains(unless it’s Apple or Dyson or a BMW). It’s more likely the second generation asians who’s parents grew up dirt poor that had the bargain trait impressed on them!
@Emerald Owl: You can literally save thousands a year here, depending what you're buying. Hardly $5…
@Gizdonk..What is ethnicity got to do with being savvy and accessing good prices? This is just common sense as you can save thousands of dollars on Ozbargains. Personally, I don't know why you waste so much of your times here if you just save $5.
Thank you for the compliment
I'm mid-50's and have only lived in Australia for 13 years, so that is the length of my contributions, but I'm happy at where my balance is at. We're on track to have a comfortable retirement.
There's a lot of myths written about how much super you'll need in retirement. Obviously, the more you have the better, but the $1 million minimum is nonsense. With a balance way less than that and a paid off house, you'd be fine given that you'd probably qualify for some level of government pension.
In an ideal world we wouldn't need to have a super system as it is basically deferred earnings and people could/should invest it as they see fit - but we don't live in an ideal world. So many people just wouldn't invest and end up retiring with nothing, thereby being a burden on the taxpayer - especially as our population is aging, meaning more old people. Some kind of compulsory system is needed. This is becoming a huge problem in wealthy Western European countries like Germany, where the vast majority of people rely on a state provided pension. Unfortunately, the boomers are using it all up meaning that little is being left for the next generations, therefore taxes will have to rise considerably to cover the shortfall. This is such a problem in countries with a large private system - UK, US, Australia, and I think, Holland.
I don't many people realise how big the super system is. It's about 1.5x GDP and will be $10 trillion in my lifetime. It's a monster.
The compulsory system here is that when you need to go into a nursing home, they take your house and pay off what your cost to the taxpayer is there. So don't go thinking you can leave the house to the kids. Won't be much after your 6 months/few years in a high care facility.
Err, I never said that was the case?
Sorry wasn't implying that you did, but just another way they get you!
For comparison. I'm 46. Current super balance $425K. Home in Perth paid off. Investment property on Sunshine Coast. Wife 45. Her super balance similar to yours after having having 3 young daughters over the past 11 years.
Until GFC II and some “emergency” is used as an excuse by the powers to take “urgent action” and the money vanishes overnight.