Considering retiring
in 10 years?
Start planning now.
Whether you’re ten years out from the official retirement age,
or simply considering retiring early, it’s a good idea to start
planning your retirement now.
Ten years is a long time
The ten years you have left in the workforce gives you plenty of time to arrange your finances
to ensure your retirement is everything you want it to be. But if you leave everything to the last
minute you may find yourself feeling disappointed, so now’s the time to make plans.
How long will retirement last?
These days people are living longer than ever before, with most people expecting to live
beyond their 80s. And if you retire at 65 and live to 85, that’s twenty years you’ll have to
support yourself without earning an income. You could be retired for as much as a third of
your life.
Career
Post-career
Birth to age 25
Ages 25 to 60
Age 60 onwards...
{
{
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Youth & starting out
25 years
35 years
20+ years
What will your retirement look like?
Everyone has a different idea of retirement. For some it might be a time to look forward to
travelling, spending more time with grandchildren or scaling back to part time work. Whatever
your vision, you need to match your finances to it as closely as you can.
There are plenty of things to consider about your future lifestyle, such as:
• where you want to live
• how much travelling you want to do
• what your day-to-day activities will be.
What will your expenses be?
“Start building for retirement early as you can
so you don’t have to sacrifice your quality of
life as you near the end of your career.”
—One of our Retirement Access members
There are also some financial questions, such as:
• Will you have any debts or a mortgage you need to pay off?
• Will you have any medical conditions requiring treatment?
• Are you aiming to leave an inheritance for your children?
What does ‘comfortable’ mean to you?
Lots of people talk about having a ‘comfortable retirement’ but what does that really mean?
The Association of Superannuation Funds Australia’s (ASFA) Retirement Standard defines
a comfortable retirement as being able to take an annual holiday (in Australia or overseas),
renovate your house, buy a new car and eat out regularly.
Having a comfortable retirement will cost around $42,000 a year as an individual, or around
$58,000 as a couple.1
Considering retiring in 10 years? Start planning now.
FACT SHEET
But if you’re prepared to scale that back to a couple of short
breaks each year, occasional visits to restaurants, infrequent
leisure activities and getting by with your current car and home,
then about $23,000 will probably cover an individual and
around $33,000 for a couple, which the Retirement Standard
considers a ‘modest’ retirement.1
How much can you save now?
So, now’s a good time to put some thought into what your
retirement will genuinely be like. Ten years out, visualising
yourself retired may not be that easy but it helps to have some
idea of what your annual income needs to be.
If you’re aged 49 and over you can receive up to $35,000
a year in concessional contributions (pre-tax contributions
such as salary sacrifice and employer contributions). Anything
you contribute above those amounts is taxed at your highest
marginal rate
What you need to ask yourself
There are three important questions you need to ask yourself
now:
• How much money will you need in retirement?
• How much are you prepared to contribute now?
Super is one of the most tax-effective ways to save because
you generally only pay 15% tax on contributions instead of your
normal marginal tax rate (where your income is $300,000 or
less), but there are limits on how much you can put into super
each year at that low rate.
How long are you prepared to work?
The longer you’re prepared to keep working, the less you may
need to save for your retirement, but do you still want to be
working after you turn 70? This is something to think about.
Rather than just stopping working altogether, what other things
can you do to earn an income? Do you have other skills or
hobbies? Can you re-train to do something that better suits your
retired lifestyle?
• How long are you prepared to keep working?
The response to one question might influence the others, so
thinking about how they work together might give you greater
control of your potential retirement
outcomes.
“About 10 years before you plan to retire,
start really learning about super and start
contributing more to your fund.”
How much money will you
—One of our Accumulate Plus members
need?
There’s a simple rule of thumb: if you
want to maintain your current lifestyle after you retire you’ll need
two-thirds of your current annual salary per year.
Let’s say you’re taking home around $65,000 after-tax each
year now, this means you’ll probably need around $44,000 a
year when you retire.
Ask yourself: what’s your take-home pay going to be after you
stop working?
Retirement doesn’t have to mean doing
nothing, but you should consider how
bringing in extra income can reduce the
government benefits you may receive. That’s
why it’s important to consider speaking to
a financial planner, to help you get the most
from your retirement income.
Another flexible approach is to ease yourself into retirement with
a transition to retirement pension. In the years leading up to
your permanent retirement, you work less and supplement your
income from your super. This approach may also have some
useful tax breaks. You can read more about this in our transition
to retirement fact sheet, available from oursuperfund.com.au.
The table below gives you an idea of how much you’re likely to
need in super in order to achieve different levels of retirement
income:
Where the money comes from
To retire at this age,
For this
To retire at this age,
FEMALES may need to save
annual
MALES may need to save
around this much super2
income in around this much super2
retirement
Age 60
Age 65
Age 60
Age 65
Plenty of retirees convert their super into a pension and receive
a regular income from it. We offer a Retirement Access pension
to help you do this.
$453,580
$404,360
$25,000
$417,210
$363,430
$907,150
$808,710
$50,000
$834,420
$726,850
$1,360,730
$1,213,070
$75,000
$1,251,630
$1,090,280
$1,814,300
$1,617,420
$100,000
$1,668,840
$1,453,710
$2,267,880
$2,021,780
$125,000
$2,086,060
$1,817,130
Of course these figures are just estimates based on some
general assumptions2, but they give you the idea. And you
don’t need all of that in superannuation—you may have other
investments that you may be able to sell, or that will provide
another source of income, such as your house, an investment
property or shares.
The amount of money you’ve saved for your retirement is a key
factor in determining what your retired life will be like in reality.
This leads to two questions: how much can you save now, and
how long are you prepared to work?
Your super
Other people choose to take their super as a lump sum. The
risk in taking a lump sum is that you’ll spend it all (on a house,
renovations or cars) and end up relying on the Age Pension. It’s
your choice, and best to weigh up the pros and cons of what is
suitable and how you’ll manage your money.
The Age Pension
The age at which you can start receiving the government’s Age
Pension is set to rise to 70 by 2035, so if you were born after
1965, you won’t qualify for it until you turn 70. What’s more,
there’s no guarantee you’ll be eligible for it, as you’ll need to
satisfy an income test and assets test to qualify.
Even if you do qualify, the Age Pension is likely to only provide
enough to cover your basic expenses.
In short, you may not want to depend on the Age Pension
alone.
2
Considering retiring in 10 years? Start planning now.
FACT SHEET
Other sources
Once you retire you may continue to earn income from several
sources besides your super and the Age Pension, including
dividends from any shares you hold and rental income from
investment properties.
It’s important to remember there may be tax implications; that’s
why it’s important to speak to a financial adviser to help you
make the most out of your retirement income
So what can you do now to increase your retirement income?
If you’re a current Commonwealth Bank employee and would
like to meet with a Commonwealth Financial Planner, contact
Employee Banking on 1800 054 000.
You can also contact the Financial Planning Association on
1800 626 393 or visit www.fpa.asn.au for a list of financial
advisers.
We’re here to help
What you can do now
Retirement, superannuation, pensions, tax—it can all get
confusing, which is one of the reasons many people put off
doing anything about it.
1. Start off with a 5-Minute Workout Warm Up—this online
calculator can show you what sort of retirement income
your super is likely to provide for you and how much you
need to save for your desired income level. See more at
oursuperfund.com.au.
If you’ve got ten years of your working life left, now is the ideal
time to make sure your retirement savings are on track.
If you have any questions please contact us on the details
below or visit oursuperfund.com.au for useful tips, fact sheets
and more retirement information.
2.Start boosting your super—salary sacrifice and personal
contributions are the easiest and one of the most taxeffective ways to increase your savings for retirement,
especially if you’re over 50.
Looking for useful tips, fact sheets and retirement
information? Go to oursuperfund.com.au
3.Check your super investment strategy—now could be a
good time to review your investment strategy to make sure it
matches your risk profile. You can choose from a selection of
investment options to suit your needs.
4.Check your insurance—as you age, your insurance needs
change with your circumstances. If you’ve paid off your
mortgage or other debts and the children have moved out
you may not need as much cover, so check whether your
cover still suits your needs.
5.Bring your super together and find any lost super—if
you’ve had multiple jobs, you may still have other funds.
Consolidating these into one account can save on fees and
cut down your paperwork. While you’re at it, ask us to track
down any lost or other super you may have in other funds.
6.Seek some further help or advice—because your
retirement is likely to be funded by a certain amount of
money that needs to last an indefinite timeframe, planning
is important. We recommend you to speak to a financial
planner who can talk to you about your options and the best
approach for your unique financial situation.
We’ve made it easy for you to consider (or continue) seeking
financial advice from an adviser of your choice. The fees you
agree with any licensed financial adviser for advice about
your Accumulate Plus or Retirement Access account can
be deducted from your account balance. This can be a tax
effective way to pay for financial advice as fees are paid from
your super account rather than your take-home pay.
Footnotes:
1 ASFA Retirement Standard March 2015 (www.superannuation.asn.au)
2 Important notes about the table on page 2: The figures are only estimates in
today’s dollars and are based on the following general assumptions: (i) life
expectancies of ages 83-85 for males and ages 86-88 for females (Australian
Bureau of Statistics, November 2013) and (ii) investment earnings of 5.5% p.a.
(after fees and no tax applying) over the life expectancy period from the relevant
age indicated in the table, with 2.5% inflation—these return and inflation figures are
consistent with (and not more than) similar figures used by ASIC for a conservative
investment option. The figures assume the annual retirement income shown
comes from super savings only; they do not factor in additional contributions
beyond the age shown, any entitlement to social security, nor the impact of fees
that may apply in the retirement income phase. We cannot predict things that will
affect the outcome, such as movements in investment markets and the assumed
earnings rate is not an indicator of future performance. This information is not
intended to be your sole source of information when making a financial decision.
You should consider whether you should obtain advice from a licensed financial
adviser.
Commonwealth Bank Group Super
Accumulate Plus and
Retirement Access members
Defined Benefit members
and pensioners
oursuperfund.com.au
oursuperfund.com.au
1800 023 928 between
8am and 7pm (Sydney
time) Monday to Friday
1800 135 970 between
8am and 7pm (Melbourne
time) Monday to Friday
[email protected]
via online member login
GPO Box 4758
Sydney NSW 2001
GPO Box 4303
Melbourne VIC 3001
(02) 9303 7700
(03) 9245 5827
This fact sheet was prepared and issued on 24 August 2015 by Commonwealth Bank Officers Superannuation Corporation Pty Limited (‘the trustee’) (ABN 76 074 519 798, AFSL
246418) as trustee of Commonwealth Bank Group Super (‘the fund’) (ABN 24 248 426 878). The information is general information only and does not take into account your
individual objectives, financial situation or needs. You should consider the information and its appropriateness, having regard to your own objectives, financial situation and needs.
If the information relates to acquiring or continuing to hold a particular financial product (eg. Accumulate Plus or Retirement Access), you should obtain a Product Disclosure
Statement (PDS) relating to the product from our website oursuperfund.com.au or by calling us on 1800 023 928 and consider the PDS before making any decision about whether
to acquire or continue to hold the product. You should also consider seeking professional financial advice before finalising any decisions that may affect your financial future.
GroupSuper/0976/0815
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