Through the activities in this topic you will discover how super works and what you need to do to keep track and keep it working for you.
Group activity - Case study: How much super will you have in retirement?
Use the MoneySmart retirement calculator and the story of fictional Olave, Kate and her mum to practice calculating how much super you will have in retirement.
Although retirement is a long way off, Kate has seen the experience of her Mum who stayed at home, while Kate and her siblings were at school. Her Mum is 55, is working full-time now and has a super balance of $80,000. Kate wonders what income her Mum may have at her desired retirement age of 67.
Enter these details for Kate’s mum into the calculator:
Date of birth: 01/01/1961
Income: $70 000
Desired retirement age: 67 years
Super balance: $80 000
Employer contribution: 9.5%
Do you make additional contributions? NoBack to topic
Employer contributions to your super
How much should your employer be contributing to your super?
Laura is 20, works less than 30 hours per week and earns $1200 per fortnight.
Enter these details in the Employer Contributions Calculator to work out how much Laura’s employer should be contributing to her super.
Now use the Employer Contributions Calculator to work out how much your employer should be contributing to your super.
If you are working, by law your employer must contribute 9.5% of your salary to your super fund on a quarterly basis.
- Do you know if your employer is paying your super?
- How can you find out? Hint: You could check your pay slip and/or your super statement
Kyla is 26 and has been working for three years, and is earning $42,000 per year. Her employer contributes 9.5% of her salary to her super fund, and she now has a super balance of $7,000.
Kyla’s super fund has the following investment options:
- Conservative investment option
- Is expected to achieve lower returns
- Will be more stable in value
- Suits a time frame of more than 3 years
- Balanced investment option:
- is expected to achieve high returns
- will move up and down in value
- suits a timeframe of more than 5 years
- Growth investment option
- invests 85% in shares and property, and 15% in cash and fixed interest
- aims for strong returns
- will move up and down in value more than the other 2 options
- suits a timeframe of more than 10 years
Kyla wants to see how much super she’ll have when she retires, and what the potential effect may be in choosing the different investment options. Kyla is interested in the balanced and growth investment options as she has a long time until retirement and is prepared to take more risk than the conservative option.
Use the Superannuation Calculator to see examples of how different investment options perform. These examples are illustrative only.
Enter this information in the calculator for Kyla:
Date of birth: 01/01/1994
Income: $42 000
Desired retirement age: 67
Super balance: $7 000
Do you make additional contributions? No
Fee level: Medium
Investment option: Balanced
Kyla has selected the balanced investment option.
What if Kyla chose the growth investment option instead?
Click on Compare alternative fund and enter the following information:
Fee level: Medium
Investment option: Growth
Over the long term, high growth assets are expected to deliver a higher return, which means a higher super balance. But they are higher risk. This means that the value of your super can move up and down over shorter time periods.
Note: This calculator provides an illustrative example only. It is a model not a prediction. There are many assumptions made in calculating these figures and the way your super will grow over time is not a smooth rate of increase – it will fluctuate depending on the performance of the investments within your super.
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Taking a career break
Lou wants to take time out from her job to study. She would like to see what the effect will be on her super when she changes her job from full time to 3 days a week.
Use the MoneySmart career calculator to answer Lou’s question by entering this information
Date of birth: 01/01/1990
Income: $50 000 per annum before tax
Super balance: $14 000
Additional contributions: None
In the Changes to your income that affect super section, add this information :
Reason for change: Going part time
Start date: Today’s date
End date: 3 years from today
Percentage of income: 60% (i.e. Lou will work 3 days out of 5. If Lou decided not to work at all it would be 0%)
Click on Results and you will see Lou’s super balance at retirement, without her planned changes, and with her changes. The difference is called the Super gap.
- Was the impact of a career break on Lou’s super bigger or smaller than expected?
- Would knowing this information affect your decision about taking a career break?
- How could you offset the impact of a career break on your super balance at retirement?
You can use the calculator to try out different leave options, for example, taking time out to have children.
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Take home activity - What does my super look like?
This is a take home activity
- Step 1: Get to know your super – log in,
- check your personal details, balance, contributions, check your fees, check your investment option, see what services they offer – advice, tools, insurance.
- Step 2: Keep track of your super – find any lost super, consolidate your super accounts
You can find out more on the Super Guru website. Click on “Sorting out your super” to download a guide.
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