Purpose

This calculator is designed to assist you in estimating your superannuation account balance at retirement, how long that balance may last in retirement and to plan your retirement strategy.

Limitations

This calculator aims to include the most significant factors affecting your superannuation. However, a calculator such as this is unable to cater for all situations, its most significant limitations include:

• The calculator performs a “deterministic” projection. This means factors such as investment returns are assumed to be constant every year.
• When assessing age pension eligibility using the income test, the calculator only considers deemed income calculated on superannuation and all assets outside of superannuation. See Government Age Pension section below for more details.
• The non-concessional cap under 'bring-forward' arrangements represents the total amount of eligible non-concessional contributions within the bring-forward period. However, the calculator does not take into account any non-concessional contributions made in previous financial years.
• The calculator does not include the capacity to make “catch-up” concessional contributions.
• The calculator does not consider the deduction of activity fees.
• The calculator is designed for a user aged between 18 and 74.

You should consider speaking to a financial adviser if you wish to understand the impact of the limitations above and discuss your personal situation.

Disclaimer and assumptions

These projections show illustrative examples of how much superannuation you could accumulate at your chosen retirement age and how long it may last in retirement.

The information is general only and does not take into account your personal objectives, situation or needs. The results are not a representation of actual entitlements or benefits from any particular superannuation product and are not intended to be relied on for the purposes of making a decision in relation to a financial product. Before making any financial decisions consider your own financial circumstances, needs and objectives and consider getting professional financial advice.

The calculator relies upon assumptions that if varied could change the result. These assumptions are considered reasonable as they are based upon statutory rate and requirements, ABS data and smartMonday member data. The projections assume an investment in a superannuation account in accumulation and retirement phases, as well as a Government Age Pension in the retirement phase. You can choose to exclude the Government Age Pension from the projection or include other regular income in retirement.

Other important assumptions are listed below and are based on current laws and their interpretation as of 1 July 2023.

Inflation

The projection allows for future wage inflation of 4.0% pa and future price inflation of 2.5% pa.

Results are expressed in today's dollars by discounting with wage inflation in the accumulation phase and price inflation in the pension phase.

Target income is also assumed to increase at this rate.

These assumed inflation rates and the approach to discounting are consistent with ASIC Corporations (Superannuation Calculators and Retirement Estimates) Instrument 2022/603.

Pension investment returns

Assumed investment returns are used in the calculator, which can be varied. The investment options below represent different investment return scenarios, and returns are shown after investment fees, transaction costs and taxes. Investment returns are assumed to be constant every year, at the rates indicated below. Please remember that investment returns are not guaranteed. Actual investment returns are subject to market volatility and may vary from year to year. A higher return option may represent a higher level of risk. You should consider this carefully before selecting an investment option.

The assumed returns above are based on the 20-year return objective for investment options with similar risk-return profiles.

Price inflation (CPI) is assumed to be 2.5% pa, which is included in the returns.

Accumulation returns are assumed to be taxed at a 15% rate, with nominal allowance for imputation tax credit and capital gains tax concession, if applicable.

Pension returns are assumed to be taxed at a 0% rate, with nominal allowance for imputation tax credit, and this is reflected in higher assumed returns. Returns are assumed to be credited continuously.

The above assumptions can be edited to create a 'user defined' investment setting. You can alter the inflation rate and the assumed investment return within certain ranges. The user defined accumulation investment return will be automatically calculated to take into account tax.

Administration and insurance fees and costs

Fees and insurance premiums are assumed to be as follows:

The member fee and insurance fees are assumed to increase in line with wage inflation.

The annual insurance fees of $853 p.a. corresponds to the cost of default minimum Death and TPD cover for a member aged about 44-45 working in an occupation with an occupation factor of ‘White collar’. Actual insurance fees may be higher or lower than what you currently pay or pay in the future. Actual insurance fees may be higher if you work in an occupation with a higher risk rating.

You can alter the default settings of fees (including insurance fees) across the combined accumulation and retirement phases within certain ranges.

The table above does not include activity fees such as advice fees.

Personal income

Salary is assumed to increase in line with wage inflation. In any future periods where you have a period of part-time employment, your salary is reduced on a pro-rata basis.

Tax calculations allow for individual income tax rates, the Medicare Levy, the Low Income Tax Offset and the Senior and Pensioners Tax Offset. It does not take into account the Medicare surcharge or any HECS/HELP debt. Threshold and offset amounts in the first year are based on current rates. Thereafter they are indexed in line with wage inflation.

Employer contributions

Employer contributions are calculated as a percentage of salary and is defaulted to the Superannuation Guarantee (SG) rates below:

SG contributions are subject to the maximum super contribution base, which is $62,270 per quarter for 2023-2024. This threshold is indexed annually in line with wage inflation.

If you receive a different amount, you can alter the rate of employer contributions within certain ranges. If you adjust the rate higher than 12%, it will be assumed to remain constant throughout the pre-retirement phase and the minimum SG rates will be ignored. The calculator assumes that SG is paid continuously, except for when you schedule a career break.

Member contributions

Regular concessional (before-tax) or non-concessional (after tax) contributions entered by you are assumed to increase proportionately each year in line with salary.

Salary is assumed to increase with wage inflation as noted in the Inflation section above. In any periods of part-time work, these contributions are assumed to decrease pro-rata. Regular contributions are assumed to be spread evenly across the year.

The amount of a one-off, non-concessional (after tax) contribution you enter is assumed to be fixed, and is not indexed.

Concessional contributions up to the concessional contributions cap are generally taxed at 15% on contribution to the superannuation environment. Non-concessional contributions up to the non-concessional contributions cap are not subject to tax on contribution to the superannuation environment. Where a concessional or non-concessional contribution exceeds the corresponding legislated contribution limit, the contributions are subject to additional tax which is assumed to be levied in the personal income tax environment.

For the 2023-2024 financial year the annual general concessional cap is $27,500.

To the extent that the combined amount of income and concessional contributions for a particular financial year exceeds $250,000, concessional contributions are assumed to be subject to tax at 30% on contribution to the superannuation environment.

For the 2023-2024 financial year the non-concessional cap is 4 times the general concessional cap, being $110,000. This can be increased by up to $330,000 under the 'bring-forward' rules. The additional amount which can be contributed depends on total super balance and age:

• If an account balance is under $1.68m an individual can 'bring-forward' this and the next two years of contributions, and so can contribute $330,000.
• If an account balance is between $1.68m and $1.79m an individual can 'bring-forward' this and the following year of contributions, and so can contribute $220,000.
• If an account balance is between $1.79m and $1.9m the individual is not able to bring forward any future year’s contributions, and the non-concessional contribution cap is equal to the annual cap of $110,000.
• If an account balance is over $1.9m (or if an individual is aged 75 years old or older) individual’s non-concessional contributions cap is $0.

The calculator enables you to make 'bring-forward' non-concessional contributions, up to the cap. However, the calculator assumes that you have not made a bring forward non-concessional contribution in the previous two financial years that would otherwise cause you to breach the non-concessional contributions cap limit.

The calculator enables you to enter both regular annual non-concessional contributions and a one-off lump sum non-concessional contribution. If in any year the combination of these would exceed the relevant non-concessional contribution cap, the calculator will limit the contributions to the cap amount; if this occurs you will receive a message.

Please note, that if you (1) enter a regular annual non-concessional contribution, the calculator will assume that you make this additional contribution each year, and/or (2) enter a one-off non-concessional contribution, the calculator will assume that you have made that contribution at the age as designated by you which, in both cases, could mean a substantial difference between the forecast amount and your actual final account balance if you are unable to make such contributions.

The concessional and non-concessional contribution limits are indexed in line with wage inflation.

Co-contribution

In each projection year, eligibility for a Government co-contribution is assessed based on salary (the calculator does not take into account any reportable fringe benefits that may affect eligibility for a co-contribution) and non-concessional contributions. A co-contribution of up to $500 is made to the superannuation account if individuals make non-concessional contributions and their salary is below the lower income threshold. The co-contribution amount is pro-rated if their salary is between the lower income threshold and the upper income threshold.

The co-contribution income thresholds are indexed in accordance with wage inflation. For the current co-contribution income thresholds, visit the Australian Tax Office (ATO) at www.ato.gov.au/rates

Retirement age

If you enter a current age less than 67, the default retirement age is 67. If you enter a current age of 67 or older, the default retirement age is your age at your next birthday.

This approach is consistent with ASIC Corporations (Superannuation Calculators and Retirement Estimates) Instrument 2022/603.

Life expectancy

Life expectancies allow for future mortality improvements. They were derived based on the medium mortality rate assumptions in the Australian Bureau of Statistics in 'Population Projections, Australia, 2006 to 2101'.

Government Age Pension

Current Government Age Pension thresholds and rates of payment are applied, based on the Single/Couple and Homeowner status. By default, the calculator assumes that you are single. If 'Couple' is selected, the partner's superannuation assets can be entered and all other income and assets are assumed to be combined between the user and their partner. Thresholds are indexed in line with price inflation and rates of payment are indexed in line with wage inflation. It is assumed the qualification requirements for the Government Age Pension under social security legislation are satisfied.

The Government Age Pension is subject to an asset test and an income test. You can enter other investment assets outside super, which are assumed to be financial assets for the purposes of the asset and income test only. The Government Age Pension income test is therefore calculated on the basis of deemed income on all assets.

You can enter an additional income amount. This amount represents any regular income received throughout retirement in addition to drawdowns from superannuation and Government Age Pension, and will be reflected in the projected income. The additional income entered will not be included in the income test for Government Age Pension (as noted above, the income test is assessed on the basis of deemed income).

The assets outside super and any additional income entered, are assumed to increase each year in line with wage inflation.

The Department of Human Services rate estimator lets you estimate your payment rate for the Government Age Pension, based on your current or proposed circumstances and assists with working out if you will be eligible for a payment.

We have not considered any other Government benefits apart from the Government Age Pension. Contact Centrelink to confirm your eligibility for the Government Age Pension as the projections are examples only and have not considered your personal situation.

Transition to retirement

The transition to retirement optimisation:

• assumes that you continue working at the same rate
• assumes that you make additional salary sacrifice contributions and draw a pension such that their net income remains constant
• calculates the contribution and drawing level which maximises the benefit within the superannuation environment.

Transfer balance cap

The transfer balance cap restricts the amount that can be transferred into an account-based pension. At 1 July 2023 the cap is $1.9m and will increase in $100,000 increments in line with wage inflation. If at the time of retirement the projected account balance exceeds the (indexed) transfer balance cap, the maximum possible amount is assumed to be transferred into an account-based pension and any excess balance retained in an accumulation account.

Minimum income payment in retirement

The Government sets the statutory minimum amount that must be withdrawn from the superannuation environment each year in retirement (once funds have been converted to an account based pension).

Although the calculator does not enforce the statutory minimum retirement income payment amount, you'll be prompted if the target retirement income you’ve specified in the calculator is less than the statutory minimum. The calculator assumes that the excess drawdown will be re-invested outside of superannuation (e.g. saved in a bank account), and your superannuation account balance during retirement may be exhausted sooner than the run-out age shown in the calculator (as you will be required to withdraw the statutory minimum amount). In this case, the run-out age reflects the age at which both assets remaining in superannuation and the assets re-invested outside of superannuation are exhausted.

Target income

The default annual target income in retirement is 80% of take-home salary. This is intended to broadly preserve one’s standard of living, while reflecting that in retirement: tax is not typically paid on superannuation drawings; employment related expenses are no longer incurred; and one no longer needs to dedicate income to saving for retirement.

The calculator allows target income to be changed within certain ranges.

To achieve the target income, the amount drawn from superannuation in retirement is calculated as:

Target income (which can be specified) less other income (which can be specified) less any Government Age Pension amounts (as calculated by the calculator).

Where the transfer balance cap is exceeded at the time of retirement, the excess will be invested in an accumulation account and will result in both an accumulation account and a pension account. In the scenario where the target income is in excess of the statutory minimum drawdown for the pension, the income will first be drawn from the pension account up to the minimum amount and the excess income required to attain the target income will be drawn from the accumulation account.

The calculator allows the user to enter the target retirement income desired and the output will include the age at which the projected account balance is estimated to run out.

Last updated: 1 July 2023.