Federal Budget Fallout
August 10, 2016
As the dust settles on The Federal Government’s 2016 Budget we are in the position of advising people on rules that may or may not be legislated.
Hence we have been preparing two sets of projections, one under current legislation where $180,000 per annum in non-concessional contributions is allowed, and a second set where there is a lifetime limit on non-concessional contributions of $500,000.
What we are finding is that people who are within 10 years of retirement have little chance of reaching the ‘pension phase’ threshold of $1.6m by retirement. An example of someone who is classified as ‘rich’: aged 50 on a wage of $600,000 per annum with current super of $320,000 will reach around $1.5m at age 60 if they make the maximum concessional contributions of $25,000 per annum and invest $500,000 of their own money as non-concessional contributions.
The basic annual cost of living for current retirees is around $72,000 and in 10 years it will be $92,000. Thus every bit of $1.5m will be needed in 10 years to live a reasonable lifestyle.
Let’s hope the changes don’t go through, otherwise there will be a lot of Australians living close to the ‘poverty line’, which is expected to be around $45,400 per annum in 10 years time.
Not sure if your super will keep you above the poverty line? Read more.
Disclaimer: The advice provided on this website is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs.