REVEALED: How much PROFESSIONALS need to earn and have in their super at age 30, 40 and 50 to reach the super limit by age 60!

Since the proposal that super accounts be capped at $3m each, there has been a lot of talk about what this means for people’s retirement.

If your salary and current super balance are greater than the thresholds listed below for your age, you are in a fantastic position, and other strategies such as spouse contribution splitting could be an extremely beneficial strategy long term.  

Age	Estimated Superannuation Balance at each age *	Yearly salary required to reach the $3m cap based on estimated super balances	What is $3m worth in today’s dollars when you reach age 60
30	$128,000	$148,000 per annum	$1,349,000
40	$453,000	$240,000 per annum	$1,720,000
50	$1,116,000	Not achievable unless the employer pays super above the $240,000 per annum threshold required. This amount would get the total super balance to $2.465m.	$1,933,000 (Present value of $2.465m)

·        * Based on a professional graduate salary of $75,000 p.a. starting at age 22 with salary indexation of 5% per annum, and an initial super balance of $10k.  

·        Includes $1,000 of annual insurance premiums within super.

·        Net Rate of Return after admin and investments fees = 7.5% per annum

·        Inflation at 2.7% per annum

If either your salary or super balance is lower than the thresholds, you don’t need to be alarmed yet.

Firstly, you don’t necessarily need to hit the superannuation limit to have the type of retirement you want, especially for those closer to retirement. Given it has been proposed that indexation won’t apply to this cap, 30-year-olds on a like for like basis will have a cap $1,651,000 less than someone turning 60 now (adjusted for inflation). This means 30 year old's are likely to pay at least an extra $7,500 per annum in tax in retirement on a like for like basis (however, there is still 30 years for the legislation to change!).

Secondly, there are plenty of strategies available for financial advisers to help you ‘catch up’ and build your super balances above what will occur through your employer contributions and investment returns.  Commonly this occurs when you have extra surplus cash flow, finish paying off your mortgage, downsize or receive a lump sum like an inheritance.

If you are feeling behind with your super, or simply want to capitalise on your strong position, feel free to reach out for an obligation free initial appointment to discuss which strategies are available to you and how they can help.

Projected Balances Over Time:

30 Year Old

40 Year Old

50 Year Old