Growing your super

The government wants us to save for our retirement so it has provided special tax advantages to encourage us to use super for this purpose. These tax advantages mean that, for most people, saving via super is more tax effective than saving outside super. In return for the tax advantages, the government restricts when and how we can access our super.

Saving regularly into super should enable you to build a nest egg. Australians have a much higher life expectancy than ever before. Current figures show that having reached age 60 the average man will live another 21.66 years and the average woman another 25.44 years.¹

It's unlikely that the government age pension, on its own, will give you the financial freedom you want for those 20 plus years.

Will your employer's contributions provide you with enough super?

The government's Superannuation Guarantee legislation means most Australian workers now have some level of superannuation savings. But will the contributions made by your employer(s) over your working life give you enough to retire?

To answer this question you need to know two things:

• How much annual income you'll want to receive in retirement
• How much super you'll need to produce that level of income

Do you have enough super?

If you already know the annual income you want to receive in retirement (in today's dollars), use our superannuation calculator to work out how much super you'll need to generate that income. The calculator will also work out whether your employer contributions will be sufficient, or if you'll need to add extra funds into your super.

How much will I need in retirement?

If you don't know how much income you'll need in retirement, the Association of Superannuation Funds of Australia (ASFA) has undertaken research in this area and has estimated that an individual person needs $35,789 p.a., after-tax, to live a comfortable lifestyle. This assumes you own your own home and budgets for items such as $21.36 per week for gifts and/or alcohol and tobacco, $129.91 per week for food and $30.82 per week for clothing.

Think about starting now

If you need to top up your employer's contributions with extra savings of your own, starting a simple savings program as early as possible should give you plenty of time to accumulate a nest egg for your retirement.

Planning for your retirement while you are still young also means you're more likely to retire at a time of your choice, rather than having the decision taken out of your control. Discover some powerful strategies to help you maximise your super.

 If you work temporary, casual hours, or have several small superannuation accounts you're thinking of amalgamating you can kick start, or consolidate your own superannuation savings plan using a Superannuation Savings Account. Find out more.

Seek advice on the strategies that will suit you

Whether you're an expert or novice investor, good advice is important. Commonwealth Financial Planners specialise in helping you make the right investment decisions. A Commonwealth Financial Planner will work with you to develop a detailed plan designed to achieve your personal financial goals.

To find out more about how a Commonwealth Financial Planner may be able to help you, or to make an obligation-free appointment with a Commonwealth Financial Planner, call 1800 241 996 or email us.

Important information

• The information contained on this web page is of a factual nature only and is not intended to constitute financial product advice. It has been prepared by Commonwealth Financial Planning Limited without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeking professional advice relevant to your individual needs before making a decision based on this information.
• Commonwealth Bank customers who wish to obtain information about Retirement Planning may do so by contacting a Commonwealth Financial Planner. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139. Commonwealth Financial Planning Limited is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.
• 1. Australian Government Actuary. Australian Life Tables 2000-02: Expectation of Life at Selected Ages.