Pre-retirees struggling to boost superannuation balances
The techniques that pre-retirees have used in the past to amass a larger superannuation pool prior to retirement are no longer possible, according to Jonathan Philpot, wealth management partner at HLB Mann Judd Sydney.
Philpot said the only way to maximise super is to begin planning earlier because under new superannuation rules, pre-retirees can no longer make a 'big push' into super in the final years of their working life.
HLB Mann Judd estimated the balance required for a comfortable retirement to be between $800,000 and $1,100,000, which generated an annual income of $55,000. Philpot said this was regardless of whether they wanted to retain their capital.
A 45-year-old with a household income of $100,000 and $120,000 in super (the average superannuation balance for that age group) who relies on super contributions would have approximately $662,000 if they retired at 65, he said.
Philpot added that a 50-year-old with a super balance of $152,000 (the average super balance for that age group) will have $535,000 in savings if they retire at 65 and solely rely on their super contributions.
"It is simply not possible to lift the super balance to a level that will provide for a comfortable retirement. The only two alternatives that they can control are to work until they are in their 70s, or save more," he said.
He said those aged over 45 should maximise their concessional contributions, while those aged 55 or more will find it difficult to fund their retirement, even if the Government reverts the concessional limit come 1 July 2014.
"Unfortunately, the rules regarding super do change quite often and this does not help build confidence in super, but relying on more favourable rule changes should not be counted on," Philpot said.
AUTHOR
