Retirement planner

Estimated time: 5 mins

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This calculator helps you work out:

  • What income you are likely to have from super and the age pension when you retire
  • How contributions, investment options, fees and retirement age affect your retirement income from super

 

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Calculator disclaimer & assumptions 

Disclaimer

  • This is a model, not a prediction.
  • The results from this calculator are based on the limited information that you have provided and assumptions made about the future. The amounts projected are estimates only and are not guaranteed.
  • This calculator cannot predict your final superannuation benefit or level of retirement income with certainty because this will depend on your personal circumstances, unexpected life events, the age pension paid, investment earnings, tax and inflation.
  • This calculator assumes that your contributions are steady and predictable and that all assumptions remain steady. These assumptions are essential so the calculator can show the effect of things you may be able to control, such as choosing a different investment option.
  • Consider updating the projections provided by this model regularly, particularly if your circumstances have changed.
  • Some of the assumptions can be changed to reflect your personal circumstances.
  • Do not rely solely on this calculator to make decisions about your retirement. There may be other factors to take into account. Consider your own needs, financial situation and investment objectives. You may wish to get advice from a licensed financial adviser.

Assumptions

For accumulation funds only

  • The calculator works for accumulation funds only. It will not work for defined benefit funds.
  • We assume your account balance will receive all income and outgoings mid-year, apart from Government co-contributions which we assume are received at the end of the year.

Results are in today's dollars

  • Results are shown in today's dollars, which means they are adjusted for inflation.
  • We make the following assumptions about inflation:
  • 2.5% each year due to the rising cost of living (CPI inflation)
  • A further 1.5% each year due to the cost of rising community living standards

Self-employed?

To use the calculator:

  • Change the employer contributions to 0%
  • Enter all your contributions as additional voluntary contributions

Contributions

  • We assume that your employer contributes 9.5% of your gross annual salary. You can change this if your employer contributes more than the minimum.
  • For future years we assume that:
    • Your employer and voluntary contributions will increase with inflation
    • You will satisfy the Work test at older ages and so are able to contribute
    • The employer contribution rate will increase by 0.5% per annum from 1 July 2021 until SG rate reaches and stays at 12% from 1 July 2025 onwards.
Before tax (salary sacrifice) contributions
  • We adjust these contributions so you don't exceed the concessional contributions cap (which applies to the total of your employer and before tax contributions)
  • We assume that the concessional contribution cap will increase in future years with inflation once the $5,000 increment amounts are reached
After tax contributions
  • We adjust these contributions so you don't exceed the annual non-concessional contributions cap.
  • We do not allow for a higher cap that can apply over three consecutive tax years in some circumstances because the calculator can only make estimates based on regular contributions each year
  • The non-concessional contribution cap is set at 6 times the concessional cap and so will increase at the same time in future years
Government contributions
  • We assume that you qualify for the Government co-contributions if you are under age 71 and you make after tax contributions
  • The total income used to determine if you qualify for any co-contributions is equal to your annual salary before tax and any salary sacrificed super contributions
  • The projection allows for the Government low income superannuation contribution up to 1 July 2017. Your eligibility for this payment is based on your annual income, employer contributions and salary sacrifice contributions.

Estimated age pension

  • The calculator assumes the maximum amount of the age pension paid by the Department of Human Services, as calculated in accordance with age pension rules as at March 2016, will increase with inflation including the expected rise in living standards.
  • It is assumed you are eligible for the age pension if you qualify under the assets test and income test applied by the Department of Human Services. You can choose to leave out the age pension from the projection results by selecting 'No' to the 'Include age pension?' question in 'Advanced settings - other'.
  • If you include your partner's details in the projection, the calculator assesses your age pension eligibility as a couple. If you have a partner but do not include them in your retirement projection, the calculator will assess you as a single person for age pension purposes and this will give incorrect results.
  • If you include your partner, the calculator will only show the age pension from when you are both retired. If only one of you has retired, you may still be eligible for some age pension but the calculator does not show this.
  • The calculator does not take into account your income needs before both members of a couple are retired. This could mean that your retirement income is overstated. You should talk to Centrelink to find out how much age pension you may be eligible for.
  • The calculator assumes you will use any accumulated superannuation savings at retirement to purchase an account-based pension.
  • In applying the income test to estimate how much age pension you will receive, the calculator allows for income on your investments including super based on income deeming rules. As some of your investments may not be subject to these income deeming rules, the actual treatment of any such investments may differ from that adopted by the calculator and this could affect the age pension you will receive.
  • No allowance is made for any lump-sum commutations of an account-based pension.
  • The calculator allows for the thresholds in the assets and income tests to increase in line with inflation. As legislated, the asset test thresholds will be reset in 2017. Further the asset test taper rate will be increased from $1.50 to $3.00 per $1,000 of assessable assets from 2017. The calculator assumes your personal assets and investments outside super increase in line with inflation including the expected rise in living standards in future years.
  • The calculator assumes you have $25,000 of personal assets (car, furniture etc.) at resale value and you have no investments outside super. You should adjust these default amounts if they do not reflect your circumstances.

Pension payments

  • In addition to any age pension, it is assumed you (and your spouse where applicable) have retired on or after the relevant preservation age and have converted any superannuation savings to an account-based pension product.
  • The calculator determines the pension payment required to achieve a steady income in retirement.
  • The calculator applies the minimum drawdown rules annually to your pension payment which may result in a higher income being paid to you in some years.

Retirement income

  • The calculator assumes any account-based pension will last until the 1 July after the pension recipient reaches the age their super is set to run out.  You can select the age you want your super to run out in 'Advanced settings - other'.
  • The age pension (where applicable) will continue to be paid for the remainder of the recipient's life.
  • Only your retirement income from your and your partner's (if applicable) account-based pension and the government age pension is included in projected results. Income from any other investments is not included.

Results are shown at 1 July

  • Your projected super balance is shown at 1 July after you reach the age indicated on the chart.
  • Your projected income results are shown for the financial year beginning on 1 July after you reach the age indicated on the chart. For example the super balance shown for age 65 is the balance at 1 July after your 65th birthday. 
  • The projection assumes that you and your partner (if applicable) will retire on the 1 July after reaching the selected retirement age.

Include your partner

  • Including your partner (if any) will allow a more accurate estimate of your age pension entitlement as a couple. If you do not include your partner the projection of your age pension entitlements will not be accurate.
  • The calculator only allows for an age difference between you and your partner of 10 years or less.
  • The calculator does not take into account your income needs before both members of a couple are retired. This could mean that your retirement income is overstated.

Investment options and returns

We make the following assumptions about investment options and returns:


Investment option

What it means

Assumed investment return (before tax and fees)*

Assumed tax rate on investment earning*

Cash

100% in deposits with Australian deposit-taking institutions

2.9%

15.0%

Conservative

Around 30% in shares and property. The rest in cash or fixed interest

4.2%

11.9%

Moderate

Around 50% in shares and property. The rest in cash or fixed interest

5.0%

8.0%

Balanced

Around 70% in shares and property. The rest in cash or fixed interest

5.7%

7.0%

Growth

Around 85% in shares and property. The rest in cash or fixed interest

6.2%

6.5%

High growth

Around 100% in shares and property

6.6%

4.5%

* These assumed default investment returns and tax rates are based on actuarial advice received in May 2015.

Actual returns will vary significantly from year to year and could be negative in some years, particularly for investment mixes where more is invested in shares and property. This calculator does not allow for such variations. You can vary assumptions in 'Advanced settings'.

There is a lot to consider when comparing investment options between funds. Risk and return objectives and asset allocation within investment options may differ between funds and should be taken into account when comparing funds.

Tax

  • We assume that you have provided your Tax File Number to your superannuation fund.
  • 15% tax is deducted from your employer contributions and before tax (salary sacrifice) contributions. We use the earnings tax assumptions above to allow for the tax on the investment earnings of your superannuation fund prior to retirement.
  • As we automatically cap your contributions, tax on excess concessional or non-concessional contributions is not relevant. No allowance is made for any other tax. In particular, if you receive a benefit amount before age 60 no allowance is made for any income tax payable.

Administration fees

  • We assume the dollar per annum administration fees are charged mid-year on average and will increase with inflation each year and that the administration fees charged as a % of your balance are charged mid-year on average.
  • We assume that these fees are tax deductible within super.

Contribution fees

  • We assume that these % contribution fees are deducted from your contributions as they as paid into superannuation.
  • We assume that these fees are tax deductible within super.

Investment fees

  • These fees represent costs relating to the management of your investments and are directly deducted from your account.
  • We assume that the investment fees charged as a % of your balance are charged mid-year on average.
  • We assume that these fees are tax deductible within super.

Indirect cost ratio / indirect costs

  • These costs represent costs that are deducted from investment returns before returns are credited to your account.
  • We assume that the indirect costs are charged as a % of your balance are charged mid-year on average.
  • We assume that these fees are tax deductible within super and that tax deductions are credited before deducting these fees from the returns that are applied to your account.

Adviser service fees

  • In 'Advanced settings' you can enter the adviser service fees that you are charged.
  • We assume the dollar per annum adviser fees are charged mid-year on average and will increase with inflation each year and that the adviser fees charged as a % of your balance are charged mid-year on average.
  • We assume that these fees are tax deductible within super.

Insurance fees/premiums

  • In 'Advanced settings' you can enter the insurance fees/premiums that are charged annually to your account. We assume the same amount (in today's dollars) will be deducted in future years until retirement.
  • Leaving insurance fees at $0 will make a fees comparison easier if you wish to assess the insurance fees/premiums and cover provided separately. Alternatively work out the insurance cost in each fund for the same amount of cover and include this in your fund comparison.
  • We assume that these insurance fees/premiums are tax deductible within super.

Further information

  • Super contributions must remain in super until you have met a condition of release. Weigh up the benefits of making additional super contributions against your other priorities, for example paying off debt.
  • Details of your super can be found on your latest super account statement or by logging into your super account online.

Retirement planner FAQs - frequently asked questions

Q. Can I save this calculator?

A. No, this calculator doesn't currently have a save function. Please let us know via feedback if you would like a save function as we may look to add this feature in the future if it proves a popular request among users.  

Q. Why doesn't this calculator have an optimum mix of super contributions like the previous version had?

In order to upgrade this calculator so that it was available to more people we had to limit some of the functionality. We will be looking at ways to recreate these features in future versions.

Q. Why isn't there a summary or action checklist?

In order to upgrade this calculator so that it was available to more people we had to limit some of the functionality. We will be looking at ways to recreate these features in future versions.

Q. Are there advanced settings I can change?

A. Yes, there are a number of 'Advanced settings' sections at the bottom of the calculator that can be expanded to allow you to change the calculator defaults.

Q. Why can't I enter a retirement age younger than 55?

A. This calculator estimates your combined super and age pension entitlements. You will be able to access your super between the ages of 55 and 60, depending on your date of birth. The calculator will not estimate retirement income from super until you have reached your preservation age.

Q. Why doesn't it allow for an age difference of more than 10 years between partners?

A. When designing the retirement planner we had to put limitations on some things in order for it to work well for the majority of people.

Once the age difference between partners is greater than 10 years it becomes much harder to predict income and age pension entitlements. We are aware this is an issue for some people but we don't plan to alter the calculator at this stage.

If you are one of these people you can still use the calculator to give you an idea of how your own super is tracking.

Selecting 'single' as your relationship status and 'no' to including the age pension in the 'Advanced settings - other' section, will allow you to estimate how much income your super may provide you when you retire.

Q: My partner and I are the same age and have similar super balances, why is our projected income from super different?

A: Men and women have different life expectancies. On average a woman's super has to last 3 years longer than a man's super which is why a woman's income from super will be lower, all other things being equal.

Q: Can I enter assets outside of super?

A: Yes, in the 'Advanced settings - other' section you can enter the total of all assets outside of super. They will be taken into account when estimating age pension entitlements.

Q: Can I enter income from other sources, such as investment income or current super pensions?

A: No, you will need to manually add other income to your estimated income from super and the age pension.

Q: If I have other income or assets, won't that affect my age pension estimate?

A: Yes, however if you enter other investment assets in the 'Advanced settings - other' section, they will be included in Centrelink calculations as an asset, and income deemed according to Centrelink's deeming rules.

Q: I have a defined benefit super fund, can I use this calculator?

A: No, this calculator only works for accumulation funds. Defined benefit funds have special tax and Centrelink implications and these can differ between defined benefit funds. You will need to get a pension estimate from for super fund.

Q: Can I change the level of income I receive at some time in the future?

A: No, this calculator only projects income at a steady rate throughout your retirement.

Q. Can I change my retirement income?

You can't select your retirement income but you can change your retirement income estimate by changing your retirement age, your personal contributions or any of the fields in the 'Advanced settings' sections.

Q: Why does my super pension increase and decrease over time?

A: The minimum pension you must withdraw each year is calculated as a percentage of your balance, for example at age 65, you must withdraw 5% of the account balance each year. The minimum percentage will increase at age 75 and every 5 years thereafter until you reach age 95.

As your account balance decreases your age pension may increase which means you would need to draw less super pension to maintain your income.

Q: Are the income figures before or after tax?

A: Income is estimated before tax although super and age pension income is tax free for most people over age 60.

Q: What rate of return does the calculator use, and can I change it?

A: The calculator defaults to average returns for a balanced investment option. Investment options can be changed in the 'Advanced settings' sections for you and/or your partner (if applicable). If you are going to change the returns to reflect your fund, we recommend you use a long term average of 5 years or longer, and change investment fees to 0% as funds usually report returns after all fees and taxes.

Q: Can I change the age my super pension runs out?

A: Yes, in the 'Advanced settings - other' section, you can change the age you want your super pension to run out.

Q: Can I estimate my retirement income without the age pension?

A: Yes, in the 'Advanced settings - other' section, you will find a question 'Include the age pension?'. Select 'No'.

Q: Is the income estimate in today's dollars or future dollars?

A: All amounts are in today's dollars.

Q: Can I change the rate of inflation?

A: Yes, in the 'Advanced settings - other' section, you can change both the rate of inflation and the assumed increase in living standards.

Q: Will this calculator work for self-managed funds?

A: Yes, however you will need to make sure you include all fees, including accounting and auditing fees. Also make sure the rate or return is appropriate for your fund.

Q: Does the retirement planner take into account that I won't be eligible for the age pension until age 67?

A: Yes, the retirement planner uses you current age to determine when you can access super and when you will be eligible for the age pension.

Q: Can I enter a lump sum contribution to super before I retire?

A: This calculator does not allow for one-off super contributions. If you are close to retirement you could change your super balance to reflect the lump sum contribution you expect to make.

Q: Does this calculator take into account current Centrelink deeming rules?

A: Yes, the retirement planner does take into account the Centrelink deeming rules that came into effect 1 January 2015.

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Last updated: 16 May 2016