Learn About Superannuation
How much super is really enough?
When you retire, you’re going to want enough money to actually enjoy it, and that’s where superannuation comes in. Australians are living longer, which means they are spending more time in retirement. With the government aged pension now subject to strict income and assets tests, it’s only logical that you’ll want to ensure your super, and other investments, will provide enough money for you to live the kind of lifestyle you want in your retirement years.
For many of us super is likely to become one of the biggest assets we’ll ever have. So with such a sizeable amount of money being invested on your behalf, it pays to be interested. As a key long-term investment vehicle, its combination of tax concessions, compounding interest, incentives and benefits should make your super an important part of your retirement strategy.
In addition to your take home pay, your employer is legally required to put 9% of your earnings into your nominated superannuation fund (unless you’re under 18 or earn less than $450 a month).
You’re also entitled to make additional contributions to accelerate your super investment (there are tax implications on contributions made above the contributions caps. See tips on growing your super).
If you’re self employed, there is no legal requirement to contribute to super, which makes it especially important to invest in your own super as there is no employer contributing on your behalf. If you don’t contribute yourself, you may not have any super to fund your retirement.
- When would I like to retire?
- Will all my debts, including my mortgage, be paid?
- Will I need extra cash to assist my children or other family members?
- Will I be happy with a modest or more comfortable retirement lifestyle?
- For how many years am I likely to be retired (bear in mind Australians now live longer than ever before)?
- Will I have any other form of income?
If you’re aiming to retire and live a comfortable life in retirement, you may need to contribute additional funds – above the standard 9% contributed by your employer.
The Association of Superannuation Funds of Australia recommends a total superannuation contribution of 12–15% of your income is required, which means you will need to contribute the additional 3–6%.