Retirement calculator

Super account

The calculator assumes your super is invested in a standard accumulation fund, and builds up with contributions (from you, your employer and Government contributions) and investment earnings over your working life. The calculator provides for the estimated deduction of fees, insurance premiums and taxes from your super account.

Retirement income stream

It is assumed that on your retirement, you will convert your superannuation to an account-based pension. This is a widely-available retirement product where you can choose how your money is invested (investment strategy) and how much money to draw down each year. There is no tax payable on earnings or money taken out in respect of a superannuation account-based pension, however legislation requires you to take a minimum amount each year.

Desired income

The calculator works by allowing you to nominate a desired level of income in retirement. As a default this is set to 60% of the default salary or if higher, the ASFA Comfortable Standard for a single person of $52,085 (as at July 2024). You can adjust this to an amount based on your actual salary or another amount that suits you by using the slider button on the right of the chart. If you choose a lower level of desired income, your super balance will last longer in your retirement, while choosing a high level of desired income might exhaust your super balance over fewer years (compared to a lower level of desired income). If your selected level of desired income is below the minimum pension drawdown amount as required by superannuation law, then the calculator may assume a higher level of retirement income than your selected level so as to remain compliant with the legislation.

All retirement income drawn is assumed to be spent, even if over the desired amount (i.e. it doesn't add to non-super assets)

For assistance in determining a retirement income, use our Retirement Income Budget Planner.

Retirement age

The calculator assumes you will start drawing your super from your retirement age. By default this is age 67, but you can adjust this. If you select a later retirement age, your estimated super balance will last longer in your retirement. Please note that you cannot select a retirement age below 60.

Age Pension

The Age Pension amount for each year has been calculated based on your super assets and the Centrelink means tests. The calculator assumes that you are an Australian resident, single and a homeowner. In the projection, the Age Pension is indexed with wage inflation, while the asset and income test thresholds are indexed in line with price inflation. The calculator assumes the Age Pension income test to be as it applies to new Age Pensioners from 1 January 2015 and asset test as it applies to all Age Pensioners from 1 January 2017.

Benchmark amount

The percentage "of what you need" is illustrative only and an estimate of what you may have in retirement as compared to the benchmark amount. The benchmark amount is based on the amount of super a single retiree eligible for the age pension would require to provide 25 years of income at the ASFA Comfortable Standard, in today’s dollars, assuming the amount was invested in an account-based pension earning 7% p.a. net of fees. The benchmark amount may not suit your personal circumstances or meet your particular needs in retirement.

Investment options

The calculator lets you model the outcome of seven different investment options (each with a default assumed investment return). This is done according to the following mix of growth and defensive assets on your estimated super balance at retirement and your estimated retirement income:

• 7.3% p.a. for Very Aggressive (93% growth assets / 7% defensive assets)
• 6.9% p.a. for Aggressive (82% growth assets / 18% defensive assets)
• 6.5% p.a. for Assertive (70% growth assets / 30% defensive assets)
• 5.9% p.a. for Neutral (52% growth assets / 48% defensive assets)
• 5.3% p.a. for Cautious (35% growth assets / 65% defensive assets)
• 3.9% p.a. for Defensive (100% defensive assets)
• 3.1% p.a. for Very Defensive (100% defensive assets)

The default assumed investment returns have been set based on long-term economic modelling (by JANA Investment Advisors) and are considered reasonable long-term estimates at the current date. The default returns listed above are illustrative only and should not be taken to provide an estimate of the amount of investment earnings you will receive. The rate of investment return is assumed to remain constant over the projection period, except there is an adjustment to allow approximately for the removal of tax during the retirement phase. If you have a short investment time horizon (for example less than 10 years) you may wish to consider current economic conditions in setting the investment return. Your time horizon includes the period your super will last in retirement. You can edit the assumed rate of investment returns on the Assumptions panel.

Assumptions

Each of the values for investment return and wage growth remain the same for the whole period of the projection. The default values for these items can be changed. However, you should note that these default values are reasonable for the current conditions and are consistent with each other. If you change the default values it is possible that unrealistic scenarios will be projected. The default investment return assumption depends on the investment strategy you select. Note that the simulator imposes some limits on the fixed assumptions but the actual experience could be outside these ranges (e.g. investment returns could be negative in some years).

The results given depend on the assumptions input. If these assumptions are not borne out in practice the actual level of your super balance at retirement may be different from that projected. In particular, if you are closer to retirement, short-term negative investment returns could significantly reduce the lump sum you may be able to take at retirement. It is recommended that you get regular updates of the projections and use different assumptions to illustrate, for example, the effect of different investment returns.

There are other assumptions used in the calculations which are set by legislation and cannot be changed (e.g. tax bands and Age Pension means test limits).

Tax File Number

There are significant taxation penalties if you do not provide your Tax File Number to your superannuation fund. The calculator operates on the basis that you have provided your Tax File Number, and cannot simulate the impact of not doing so.

Salary

The calculator uses the input salary to calculate Superannuation Guarantee (SG) contributions, eligibility for any Government contributions, and to work out your after-tax income.

Contributions

Employer contributions are calculated based on the input contribution rate and your gross salary (i.e. not limited to the Superannuation Guarantee maximum contribution base, which is the maximum Superannuation Guarantee contributions that an employer is required by law to make for an employee). Employer contributions are assumed to be at least 11.5% of salary, increasing to 12% of salary by 1 July 2025.

Salary sacrifice contributions come from your pre-tax salary, while after-tax contributions are taxed as salary before going into super. Note that salary sacrifice contributions include any contributions for which a tax deduction is claimed. The amounts of salary sacrifice and after-tax contributions are assumed to increase with wage inflation.

Consistent with superannuation law, the calculator operates on the basis that salary sacrifice and after-tax contributions can be made up to age 75 (provided the work test is met for those over age 65) see the Australian Taxation Office (ATO) website for information about the work test), but there is no age limit on Superannuation Guarantee contributions.

The calculator allows for excess contributions tax if you input contributions above the legislative limits (which are assumed to be indexed in line with wage inflation). Please refer to the Tax section for more information.

One off contribution age

If you choose to use this functionality, the simulator will assume the age you wish to make this one off contribution is at your current age.

Government co-contribution

The calculator assumes that you are eligible for the Government co-contribution if your salary is less than the legislated limits (e.g. $60,400 in the financial year 2024/2025) and you make after-tax contributions. For full details of the eligibility criteria for the Government co-contribution, visit the ATO website. For the purposes of calculating the Government co-contribution (if applicable), it has been assumed that your total annual assessable income plus reportable fringe benefits is equal to your current salary plus other pre-retirement income (or half of your other income if you have a spouse) you input. It has also been assumed that the income limits are increased in line with wage inflation.

Low Income Superannuation Tax Offset (LISTO)

The calculator assumes you are eligible for the LISTO if your salary plus other income (or half of your other income if you have a spouse) is less than $37,000. For full details of eligibility criteria visit the ATO website. The amount of the LISTO (if applicable) is calculated as 15% of your concessional (pre-tax) contributions, subject to a maximum LISTO of $500.

Tax

Employer contributions and salary sacrifice contributions are taxed at 15%. However, significant additional tax applies if your contributions to superannuation exceed certain legislative limits. The limits for the 2024/2025 financial year are:

• The limit for concessional (employer or salary sacrifice) contributions is $30,000.
• The limit for non-concessional (after-tax) contributions is $120,000.

The calculator assumes that these limits are indexed with wage inflation unless otherwise indicated.

If the sum of employer contributions and salary sacrifice contributions exceed the concessional contributions limits above, the excess is taxed at your marginal tax rate (including Medicare levy) and the calculator deducts this tax from your super balance at the point of the contribution; hence the excess concessional contribution interest charge is not allowed for. The calculator also does not allow for the carry forward of unused concessional contributions cap.

Under superannuation law, individuals under age 65 can make up to $360,000 in non-concessional contributions in one year (but the amount of non-concessional contributions that they can make are limited in the following two years so that no more than $360,000 can be contributed for the individual over the three years). Note that the calculator does not allow for this.

After-tax (non-concessional) contributions below the non-concessional contributions limit are not taxed. After-tax contributions over the limit are taxed at the highest marginal tax rate (plus Medicare levy).

If your super balance exceeds $1.9 million you'll no longer be eligible to make after-tax contributions. If you have elected to make regular after-tax contributions, the calculator will not apply these contributions from the year after you become ineligible (the contributions will remain in after-tax income). If you elect to make a one-off after tax contribution, but are no longer eligible, this contribution will not be made. The calculator assumes this limit is indexed in line with price inflation.

The calculator allows for future application of the Division 293 tax on the contributions of high income earners. Division 293 tax is levied on the "low tax" contributions of members whose "adjusted income" exceeds $250,000. The calculator assumes your "adjusted income" to be the sum of your salary, other income and concessional contributions. The calculator does not allow for any existing Division 293 debt that might be held with the ATO and assumes future Division 293 tax is paid from your after-tax income in the year it is incurred. For full details of the Division 293 tax, go to the relevant ATO website page.

The calculator assumes that the investment return used for the accumulation of the super balance has been reduced for investment tax. The calculator also assumes that investment earnings on retirement income stream products are not subject to tax. Please note that the investment earnings on any amount exceeding the $1.9m transfer balance cap (which the calculator assumes is kept in accumulation phase) are taxed at 15%.

Benefit payments are tax-free if you are aged 60 or over. This is reflected in the calculations of the calculator. The calculator does not allow for any applicable benefit payment tax for amounts taken under age 60.

Fees and insurance cost

The assumed investment fee and percentage based administration fees are the fees that are expressed as an annual percentage of your super balance. The default value of this item is based on the percentage based administration fees and investment fees (including indirect cost ratio) for investment options with similar risk profiles in the Equip fund. The calculator deducts these amounts from the investment return shown prior to calculating earnings for each year.

The assumed insurance premium and administration fees are deductions expressed as an annual dollar amount, which includes dollar based administration fees and current insurance premiums. The default value of this is based on the flat $65 administration fee plus estimated average insurance premium for members. The actual insurance premium may vary considerably depending on a number of factors such as age and salary. The calculator assumes that these amounts will increase in line with wage inflation and are deducted from your super balance each year until you retire.

Life expectancy

The average life expectancy age has been calculated based on the Australian Government Actuary, Australian Life Tables 2015-2017. The calculations allow for future improvements in longevity from your current age, based on historical improvement rates.

Retirement income stream

It is assumed that all of your superannuation is in an account-based pension, where you can choose how your money is invested (investment strategy) and how much money to draw down each year. There is no tax payable on earnings or money taken out in respect of a superannuation account-based pension, but you have to take a minimum amount (set by legislation) each year.

Desired income

This calculator works on the basis of a desired level of income in retirement. As a default this is set to the annual amount you nominated to draw from your super, plus an estimate of your Centrelink Age Pension. You can modify this to a level that suits you. If you choose a lower level of desired income, your super balance will last longer in your retirement, while choosing a high level of desired income might exhaust your super balance over fewer years (compared to a lower level of desired income). If you select a low level of desired income, the simulator may assume a higher level of retirement income than necessary to achieve your selected desired income in order to comply with the minimum amounts that legislation requires you to draw down from your superannuation pension.

Income from this account

This is the annual amount you nominated to draw from your account based pension. The simulator assumes you will modify this amount in the future to make up the balance of your desired income after allowing for any Age Pension entitlement.

Centrelink Age Pension

This is an estimate of the amount of Age Pension you would be entitled to based on the following assumptions:

• Your current age and account based pension balance
• You are a single and a homeowner
• You have no other assets
• You are not disqualified from receiving the Age Pension

In the projection, the Age Pension is indexed with wage inflation, while the asset and income test thresholds are indexed in line with price inflation. The Simulator assumes the Age Pension income test to be as it applies to new Age Pensioners from 1 January 2015 and asset test as it applies for all Age Pensioners from 1 January 2017.

If you were eligible for Age Pension prior to 2015 it is possible that different rules apply to you which would change the results. You should seek financial advice if this applies to you.

Investment strategies

The calculator lets you model the impact of seven different investment strategies (each with a default assumed before-tax investment return) according to the following mix of growth and defensive assets on your estimated super balance and your estimated retirement income:

• 8.4% p.a. for Very Aggressive (93% growth assets / 7% defensive assets)
• 8.0% p.a. for Aggressive (82% growth assets / 18% defensive assets)
• 7.5% p.a. for Assertive (70% growth assets / 30% defensive assets)
• 6.8% p.a. for Neutral (52% growth assets / 48% defensive assets)
• 6.2% p.a. for Cautious (35% growth assets / 65% defensive assets)
• 4.6% p.a. for Defensive (100% defensive assets)
• 3.6% p.a. for Very Defensive (100% defensive assets)

The default assumed investment returns have been set based on simulations from Mercer's Capital Market simulator and are considered reasonable long-term estimates at the current date. The default returns listed above are illustrative only and should not be taken to provide an estimate of the amount of investment earnings you will receive. The rate of investment return input is assumed to remain constant over the projection period, except there is an adjustment to allow approximately for the removal of tax during the pension payment phase. If you have a short investment time horizon (i.e. less than 10 years) you may wish to consider current economic conditions in setting the investment return. Your time horizon includes the period your super will last in retirement. You can edit the assumed rate of investment returns.

Assumptions

Each of the values for investment return and wage growth remain the same for the whole period of the projection. The default values for these items can be changed. However, you should note that these default values are reasonable for the current conditions and are consistent with each other. If you change the default values it is possible that unrealistic scenarios will be projected. The default investment return assumption depends on the investment strategy you select. Note that the simulator imposes some limits on the fixed assumptions but the actual experience could be outside these ranges (e.g. investment returns could be negative in some years).

The results given depend on the assumptions input. If these assumptions are not borne out in practice the actual level of your super balance at retirement may be different from that projected. In particular, if you are closer to retirement, short-term negative investment returns could significantly reduce the lump sum you may be able to take at retirement. It is recommended that you get regular updates of the projections and use different assumptions to illustrate, for example, the effect of different investment returns.

There are other assumptions used in the calculations which are set by legislation and cannot be changed (e.g. tax bands and Age Pension means test limits).

Tax File Number

There are significant taxation penalties if you do not provide your Tax File Number to your superannuation fund. The calculator operates on the basis that you have provided your Tax File Number, and cannot simulate the impact of not doing so.

Tax

The calculator allows for the fact that for account based pensions taken after age 60, investment earnings are not subject to tax. Benefit payments are tax-free if you are aged 60 or over. This is reflected in the calculations of the simulator.

Fees

The assumed investment management and percentage based administration fees (if any) are the fees that are expressed as an annual percentage of your account balance. The default value of this is based on items such as the administration fees, investment fees and indirect cost ratio for the selected investment strategy. The simulator deducts these amounts from the investment return shown prior to calculating earnings for each year.

Life expectancy

The average life expectancy age has been calculated based on the Australian Government Actuary, Australian Life Tables 2015-2017. The calculations allow for future improvements in longevity from your current age, based on historical improvement rates.