Home / Blog / A Short Guide on How to Calculate Your Retirement Nest Egg

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!

DISCLAIMER: Coastal Advice Group Pty Ltd is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.

(Trading names of Coastal Advice Group Pty Ltd include Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Compass Advice Port Macquarie, Wealth for Life Financial Planning and Coastal Advice Group Brighton/Somerton Park).

The views expressed in this publication are solely those of the author; they are not reflective or indicative of the Licensee’s position and are not to be attributed to the Licensee. They cannot be reproduced in any form without the express written consent of the author. Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

Any advice or information in this publication is of a general nature only and has not taken into account your personal objectives, financial situation and needs. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.

Before making a decision to acquire a financial product, you should obtain and read the Product Disclosure Statement (PDS) relating to that product, it is important for you to consider these matters and to seek appropriate advice.

Past performance is not a reliable guide to future returns.

Any tax estimates provided by us in this publication are intended as a guide only and are not intended to be a substitute for specialised taxation advice. We are not registered tax agents and you should consult with a registered tax agent to determine your liabilities, obligations or claim entitlements that arise or could arise, under taxation law.

The information in this publication reflects our understanding of existing legislation, proposed legislation, rulings etc as of the date of issue. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way.

The publications on this site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia.