Do we need to raise the superannuation guarantee above 9.5% to provide an adequate nest egg? Will we have enough to retire comfortably, based on the current super saving system, where employers put aside 9.5% of your wages into a super fund? Many take their retirement savings into their own control by having a Self-Managed Super Fund (SMSF – get our Free guide!) but research suggests the savings are not enough.
“Research house Rice Warner’s latest financial modelling into retirement savings adequacy has concluded the superannuation guarantee (SG) levy must be increased from its current level of 9.5 per cent to allow most Australians to have a sufficient amount of money saved for their post-working years.
Through its analysis, Rice Warner determined the theoretical range for the SG should be between 10 per cent and 15 per cent, assuming the age pension system continues to be one of the three pillars of the retirement savings system.
The research house argued if the SG fell within this band, an adequate retirement income for most Australians could be achieved.
“It can be shown that a higher level will provide a more comfortable majority for a greater number of retirees. However, higher levels will also require adjustments to tax and contribution thresholds in order to moderate the benefit for those in the top income deciles,” it said.
With regard to determining a definitive percentage for the SG, it cited a number of variable factors making this task too difficult at a particular point in time.
Elements the research house identified as influencing the exact SG level that would be appropriate included rates of return that would dictate adequacy being reached with lower superannuation contributions, future changes to the age pension means test, tax concessions, and fees and insurance premiums that could erode an individual’s retirement savings.”
As reported online at SMS Magazine.
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