Super Projection Calculator

How the super projection works

The calculator uses a simple annual compounding model. Each year it grows your balance by the assumed return, subtracts the annual fee percentage, and adds the contributions made that year. Salary, and therefore contributions, increase by the salary growth assumption. The loop runs until your retirement age.

End-of-year balance = starting balance × (1 + return − fees) + contributions × (1 − 15% contributions tax).

Compounding is the reason small differences in the return assumption produce large differences over decades. At 7% a balance roughly doubles every ten years before fees and inflation. At 5% it takes about fourteen years. The calculator lets you change the return, fee and contribution assumptions so you can see that sensitivity rather than relying on a single headline number.

Contributions are added at the end of each year in this model. Real funds receive contributions monthly or fortnightly and invest them progressively, so the actual balance can differ slightly. The difference is small over a long projection but grows if contributions are large relative to the balance.

Choosing realistic assumptions

The return assumption is the most powerful input. A diversified growth option might be modelled at 7% to 8%, a balanced option at 6% to 7%, and a conservative option at 4% to 5%. These are nominal returns before fees. Fees are subtracted separately in the model, so do not double-count them by lowering the return as well.

• Salary growth: 2.5% to 3.5% is a reasonable long-run assumption for wages. Promotions can push it higher for a period.
• Inflation: 2.5% is in the middle of the Reserve Bank’s target band. The real value is the nominal balance discounted by this rate.
• Fees: administration and investment fees vary widely. Check your fund’s product disclosure statement or fee statement.
• Retirement age: the preservation age and Age Pension age affect access, but you can model any age you plan to stop working.

Run the projection at a low, middle and high return to get a range. If the plan only works at the optimistic end, it is fragile. Increasing contributions or retiring later usually has a bigger effect than chasing an extra percentage point of return.

Contributions, caps and the 15% tax

Employer super guarantee contributions are concessional contributions. They are included in your fund’s taxable income and taxed at 15% on entry, which is why the calculator credits only 85% when the switch is on. Salary sacrifice contributions are treated the same way. Personal after-tax contributions are not taxed on entry and are not modelled separately here.

Concessional contributions are capped each year. Contributions above the cap are taxed at your marginal rate plus an excess concessional contributions charge, which can make extra contributions less attractive. High-income earners may also pay Division 293 tax, an additional 15% on contributions above the threshold. The projection ignores both.

Employer contributions are also limited by the maximum contribution base, the maximum salary on which super must be paid. Earnings above that base do not attract the guarantee. For most employees this only matters at high incomes, but it is worth checking if your salary is near the cap.

What the balance means at retirement

The projected balance is the amount in your fund when you reach the retirement age you entered. It is not the amount you can spend each year. At retirement you can usually access super as a lump sum, an income stream, or a combination, and the earnings in retirement are taxed differently from the accumulation phase.

The “today’s dollars” figure divides the nominal balance by inflation over the projection period. It gives a rough sense of purchasing power. If the real figure looks small, the nominal figure is doing less work than it appears. This is why contribution level matters more than a small change in the assumed return.

Super is only one part of retirement funding. The Age Pension, other investments, the family home and any defined benefit entitlement all contribute. For a full take-home picture while you are working, use the salary calculator. If you are comparing a contractor rate with a salary, thecontractor calculator shows the super you would give up without an employer.