5 actions you can take today to improve your income in retirement
TRANSCRIPT
5 ACTIONS YOU CAN TAKE TODAY TO IMPROVE YOUR INCOME IN RETIREMENT
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DISCLAIMER
This presentation has been prepared by SCS Super Pty Ltd (ABN 74 064 712 607, AFSL 230544, RSE L0002264), the trustee of the Australian Catholic Superannuation & Retirement Fund ABN 24 680 629 023, RSE R1055436.
Any advice contained in this presentation is of a general nature only, and does not take into account your personal objectives, financial situation or needs. Prior to acting on any information in this document, you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering, and seek independent financial advice if you are unsure of what action to take.
The material contained in this presentation is based on information received in good faith from sources within the market and on our understanding of the legislation at this time.
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When thinking about your retirement finances, it’s important to consider:
• How much super you might accumulate by the time you retire
• Your income level after retirement
• How long your savings might last
The Australian Catholic Superannuation Super Projection Calculator can help you estimate your financial position at retirement in relation to these three elements. If you find that your projection falls short of your desired outcome, you will need to consider taking action to improve your situation.
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In this presentation we’ll look at five actions you can take to improve your retirement outcomes and explain how you can use the Super Projection Calculator to understand their effects:
1. Make additional contributions to super
2. Defer retirement for a few extra years
3. Look at whether you'll be eligible for the Age Pension
4. Reassess your expectations about your income level
5. Adjust your investment options if necessary
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ACTION 1: MAKE ADDITIONAL CONTRIBUTIONS
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Making additional contributions to super is a great way to boost your retirement savings, thanks to the effects of investment earnings compounding over time.
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There are two options for making additional contributions to super:
1. Salary sacrifice contributions: contributions that come out of your pre-tax income
2. After-tax contributions: contributions made from your take-home pay
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The Australian Catholic Superannuation Super Projection Calculator can help you understand the effect that additional contributions could have on both your super balance at retirement and your income level throughout retirement.
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The calculator compares your result to the comfortable and modest retirement lifestyle standards, as determined by the Association of Superannuation Funds of Australia.
These standards act as a benchmark so you can easily evaluate how your savings are tracking.
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For example, let’s look at the situation of a member who:
• is a 54 year old female
• currently earns $85,000
• has $120,000 in super
Using the Super Projection Calculator, we can see she’s expected to retire with a balance of approximately $275,000.
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Comfortable lifestyle
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$275,000
Modest lifestyle
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*This projection does not take into account any eligible Age Pension income
If the member draws income at a comfortable lifestyle level, her savings are expected to last until approximately age 74*.
*At this stage of the calculation, the example does not take into account any eligible Age Pension income
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Using the calculator, the member can see how different types and levels of contributions could increase:
• her balance at retirement
• the number of years her savings would fund a comfortable lifestyle.
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ACTION 2: DEFER RETIREMENT
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If possible, delaying your retirement by a few years can be an effective way to improve your financial outcomes at retirement:
• more years of work equates to more super contributions, and a larger balance at the time of retirement, plus;
• A delayed retirement means your accumulated super balance won’t need to generate retirement income for as many years.
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Using the Super Projection Calculator, you can adjust your retirement date and see what effect more years in retirement could have on your retirement situation.
Income projection for member retiring at age 67
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Income projection for member retiring at age 71
Income lasts 6 more years
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Income projection for member retiring at age 74
Income lasts 9 more years
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ACTION 3: INVESTIGATE AGE PENSION ELIGIBILITY
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If your retirement projection falls short of your desired lifestyle, look into whether you can rely on the Centrelink Age Pension to supplement your income.
To be eligible for a Centrelink Age Pension payment, you must meet:
• Age and residence requirements
• An income test and an assets test.
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The Super Projection Calculator can give you an idea of:
• the level of Age Pension you may be eligible for
• the impact that pension payments may have on the longevity of your income after retirement
The Calculator provides an estimate only, your actual Age Pension payment may be different to what is shown in your projection.
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ACTION 4: REASSESS YOUR EXPECTATIONS
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If your projected savings are insufficient to fund your desired lifestyle for the duration of your retirement, you may need to adjust your expectations about the level of income that will be available to you.
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You can use the Super Projection Calculator to see the impact different retirement incomes may have on your financial situation in retirement.
Income of $35,000 pa lasts 4 more years
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ACTION 5: ADJUST YOUR INVESTMENT OPTIONS
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If your superannuation is currently invested conservatively you may be able to bolster your returns, and potentially your outcomes at retirement, by reviewing your investment option.
A 'more aggressive' investment strategy generally means higher risk, but also higher returns over time.
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The Super Projection Calculator can provide an estimate on how the following investment options that are offered by Australian Catholic Superannuation may affect your balance at retirement and income during retirement:
• Conservative
• Moderately conservative
• Balanced
• Moderately aggressive
• Aggressive
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The calculator will provide you with an estimate only – based on average returns.
The calculator cannot predict exact returns or significant changes to market conditions.
The projections should be used as a guide only, please see the calculator assumptions for more information.
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Try the calculator for yourself!
Get your own savings and income projection
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Find out how different actions could impact your own retirement outcomes:
Action 1: Make additional contributions
Action 2: Defer retirement
Action 3: Look into government support
Action 4: Reassess your expectations
Action 5: Adjust your investment options
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Do you have questions about your retirement projection or require specific advice on your own situation? We offer two appointment-based services that can help set you on the right path for your retirement planning.
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Check out our Financial advice resource to learn more about:
What a financial planner can help you with
What benefit you might gain
What you can expect from an appointment
Financial planning fees
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@AusCathSuper
Australian Catholic Superannuation
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CONTACT US
T 1300 658 776
W www.catholicsuper.com.au