What is superannuation & how much is enough?
Basically, Superannuation is a distinctive savings account for when you retire.
It is designed to be a replacement for your annual income and keep you in the lifestyle to which you have become accustomed, taking into account that when retired there will be much more time available for:
- house renovations
- pursuing hobbies
- meeting new people
For most of us we currently get 9.5% (2015 financial year) of our yearly wage contributed to super.
Those running their own business sometimes don't think about super until too late.
The amount you need will depend on how much income you want during your retirement years and the number of years you'll be relying on your own funds.
The higher the income you want, and the longer you'll need it, the more money you'll have to save before retirement.
If you're a man planning to retire at 60, you should budget for your retirement funds to last for at least 25 years.
A woman should budget for even longer.
Other things to consider include:
The age at which you're planning to retire – the earlier you plan to retire, the longer your funds will need to last!
Whether your home and any other large debts will be paid off by the time you retire?
What you want to do in your retirement (e.g. travel, pursue a hobby) and how much these things will cost?
Whether you want to work on a part-time or casual basis in retirement
What expenses you'll have in retirement (e.g. a new car, house repairs) and how much you'll need for expected and unexpected expenses.