## The simplest super calculations

Is my super enough?

Given I’ve spent a few years looking at superannuation and what’s required for ‘early retirement’ (e.g. anything under 60) I figured it might be useful to give the short version here.

In essence what you need to do is first determine an amount you want as a gross yearly income - let’s call this $50000 (for estimates of what the ASFA thinks is a reasonable income see their retirement standard)

For the simplest example of retiring at 55 on 50000 you can use the standard ‘deeming rate’ for defined benefits of 8.33%. So 50000/0.0833 = $600,240. So in the most simplistic terms you’ll need a 600K super balance for a 50K pension at age 55.

But - aren’t there always ‘buts’? :-)

- The taxman is going to tax you like a normal income earner at 55 so you’ll loose circa 20% to tax + medicare. So 50K gross will end up being circa 40K net.
- if you’re not in a defined benefit scheme then it’s quite likely your deeming rate (the rate at which a commercial annuity is calculated from your gross super) will be closer to 6% than 8, and therefore 50000/0.06 = $833,333 of super will be required
- if you’re not in a defined benefit scheme then it’s likely that your
*minimum*retirement age is fixed at 60.. so doing calculations for retiring at 55 is pointless..

So, in summary, if all, or most, of the ‘buts’ are in your favour, and you’d like to retire at 55 on what the ASFA says is a comfortable standard for a couple, you’ll need circa $62828 per annum. If we ‘deem’ in the range between 6-8% you’ll need somewhere between $750K and $1 million as a super balance to make this happen.