A Short Guide on How to Calculate Your Retirement Nest Egg

A Retirement Nest Egg is the balance in your superannuation and personal investments at retirement age. This balance is offset by any investment fees, insurance premiums and other account fees paid out of your superannuation and investment balances.

To know the size of the nest egg you need to retire, you will need to know the average amount you need to live on annually and the duration for which you will be getting this amount.  If you know the period you plan to retire, you have already started determining your retirement nest egg.

An estimate of how much income you will need in retirement is an estimate of how much money you will need to live on in retirement. You can use an online retirement calculator to estimate your retirement nest egg.

If you’re curious to learn more about how you could calculate your retirement nest egg, keep reading.

How Do I Calculate How Much Money I Will Need in Retirement?

As our life expectancy increases, your retirement may be as long as one-third of your life which means you have even more plans to make. Starting your retirement plan sooner will put you in a better position for your golden years.

Deciding how much money you will need during your retirement is easier than estimating how much money you need to retire. Knowing how much you will be earning in retirement will help you calculate how much money you need to accumulate in your superannuation account.

The Three-Pillar System

The Age Pension: The Age Pension is a guaranteed income stream provided by the Australian Government to retired citizens of Australia who satisfy Age Pension eligibility and a means test. The income test is different for couples (both partners must satisfy the income test) to singles (only one partner must meet the income test).

SGC: SGC is a superannuation guarantee contribution. This payment is the compulsory superannuation payment deducted from your salary and paid into your nominated superannuation fund. The percentage rate for superannuation guarantee payments by your employer is currently 10.0%

Voluntary Super Contributions: Voluntary contributions consist of the contributions you make to your superannuation account in addition to SGC. Even small amounts add up over time, and voluntary contributions can reduce the amount of tax you pay.

How Else Do I Boost My Retirement Nest Egg?

Government Co-Contributions: If you’re on a low income, you may also be eligible for extra contributions from the government. The Government will contribute a portion of your voluntary superannuation contributions.

However, to be eligible for the government co-contribution, you must make a personal contribution to superannuation and satisfy the income test. You can get more information about the government co-contribution at the Australian Tax Office.

Spouse Contributions: Your spouse’s superannuation contributions can be transferred to your superannuation account if you are married. You or your spouse must gain the benefit from these superannuation contributions. If you are eligible for the government co-contribution, your spouse contributions can be included in your income for the co-contribution.

The Bottom Line

A Retirement Nest Egg is essential if you want to live your best life after years of hard work. It’s important to review and build your retirement strategy, prepare for the transition of your Superannuation to an income stream (pension) and invest your funds to reflect your goals. Regardless of your age, Coastal Advice Port Macquarie has the knowledge and expertise to help you plan for your perfect retirement. If you need financial advice for retirement and more, book a complimentary first meeting with us today!