Superannuation calculator limitations and assumptions
Disclaimer
This super calculator is provided by Australian Retirement Trust Pty Ltd (ABN 88 010 720 840, AFSL 228975), the trustee of Australian Retirement Trust (ABN 60 905 115 063), 'the Fund'.
This calculator is only intended to provide illustrative examples based on the assumptions we’ve listed here and what you put into it. So it’s not a replacement for getting professional financial advice for yourself. The projected figures generated by this calculator aren’t guaranteed, are provided as an illustration only, and may vary from actual results. You shouldn’t rely on this calculator when making a decision about any financial product, including decisions about a particular product, fund or strategy. Actual outcomes will depend on a range of factors outside of the control of Australian Retirement Trust. Australian Retirement Trust expressly disclaim all liability and responsibility to any person who relies, or partially relies, on anything done or omitted to be done by this calculator.
This calculator is intended to show the potential effects of different levels and types of contributions only, and it doesn’t take into account factors such as, for example, the effect different investment options can make to your retirement outcomes, or fluctuations in investment returns over time. It also doesn’t take into account whether you have a spouse/partner (or any spouse/partner contribution strategies), or any assets outside superannuation or income other than your salary.
You should also consider that you generally can’t access superannuation until you retire. The calculator is only a guide. Its results rely on key assumptions that are outlined below.
Assumptions
We believe the assumptions used in this calculator are reasonable for the calculator’s purpose because:
- assumptions including superannuation contribution percentages, Government co-contribution rules and tax rates are based on current tax and super laws, which are consistent with relevant legislation and do not consider future or proposed changes,
- assumed investment returns for each investment strategy, are set by Australian Retirement Trust's Actuary based on our expectations for our investment options, and
- the default assumptions in relation to retirement age, drawdown period and wage and price inflation rates comply with default assumptions for superannuation calculators set by ASIC.
However, you need to keep the purpose of the calculator in mind and remember that it’s not intended for you to rely on it when making a decision about your superannuation.
You should get financial advice tailored to your circumstances and consider the relevant product disclosure statement (PDS) and target market determination (TMD), before making a decision to acquire or continue to hold any financial product.
Limitations
In addition to the specific limitations outlined below, this calculator only allows you to select a current age of between 15 and 67 and a retirement age of between 60 and 75. Because of this limitation, it is not suitable for use by people whose current age is outside that age range and/or who do not plan to retire between the ages of 60 and 75.
The calculator is based on the relevant laws in force today. It does not take into account future changes to those laws. Future changes to the law in future may affect the accuracy of the results produced by this calculator, potentially significantly.
This calculator accepts an employer super contribution range of between 10 and 25%. If you're self-employed and don't make super payments within this range to yourself, this calculator will not work for you.
Tax
The calculator is based on the income tax rates for Australian residents for the 2024–25 financial year. The rates include the Medicare levy and the Low Income Tax Offset.
The calculator doesn’t take into account other items such as the spouse contribution tax offset and the surcharge for private health insurance and this may impact the accuracy of the calculated tax savings for users to whom these apply.
The calculator applies contribution tax of 15% to employer contributions and other before-tax contributions, unless your income (including employer and all other before-tax contributions) is over $250,000, in which case the calculator applies an additional 15% tax to before-tax contributions over this threshold.
Contribution caps
Before-tax contributions (employer contributions, salary sacrifice contributions and after-tax contributions for which a tax deduction is claimed) and after-tax contributions are limited by the respective contributions caps. For 2024–25, the concessional contributions cap, which applies to before-tax contributions, is $30,000. The calculator limits the amount of before-tax contributions to this before-tax cap and does not take into account “catch up” concessional contributions (where, subject to meeting certain conditions, unused portions of the cap from prior years can be rolled over and used in future years). If your total concessional contributions exceed the cap and you would otherwise have been eligible to make ‘catch up’ concessional contributions, this may result in the calculator underestimating how much you can contribute before tax.
For 2024–25, the non-concessional contributions cap, which applies to after-tax contributions, is $120,000. If you are under age 75 and your total super balance on 30 June of the previous financial year equals or exceeds $1.9 million, your allowed non-concessional contributions become nil. The calculator does not take your total super balance into account in calculating your retirement income and therefore cannot determine whether you will exceed the general or your personal transfer balance cap now or in retirement. You can find out your personal transfer cap by contacting the ATO or logging into myGov. If your total superannuation balance does equal or exceed the general transfer balance cap, the calculator may overestimate the level of after-tax contributions you are permitted to make without exceeding your non-concessional contributions cap. No allowance has been made for option to 'bring forward' non-concessional contributions over a three year period.
Government contributions
Eligibility for the government co-contribution is based on the salary and after-tax contributions you enter and does not consider any other eligibility conditions (like your account balance). This means the calculator may deem you eligible for the Government co-contribution where you are not eligible and, where it does so, overestimate the amount by which your superannuation balance and retirement income could increase by making extra contributions. The government co-contribution has been based on the income thresholds for the 2024–25 financial year.
The calculator includes the Low Income Superannuation Tax Offset.
Before-tax or after-tax contributions (e.g. salary sacrifice super)
The calculator provides an indicative example of whether a user may be better off contributing on a before-tax or after-tax basis, or a combination of both. How it does this is described below.
If the annual salary you enter is below the maximum government co-contribution eligibility threshold, the calculator will prioritise after-tax contributions, up to the amount necessary to receive the maximum co-contribution for the salary you entered. Any further additional contributions would then be indicated as before-tax contributions, up to the concessional contributions cap, then after-tax contributions thereafter.
If the annual salary you enter is above the maximum government co-contribution eligibility threshold, the calculator will prioritise before-tax contributions, up the concessional contributions cap, then after-tax contributions thereafter.
Projected additional amount at retirement age
The projected additional amount at retirement age is based on the assumptions below. The projected amount is expressed in today's dollars which means the projected amount has been adjusted by a discount rate to express the balances in today's buying power. The default discount rate used prior to retirement is 4.0% p.a., which reflects wage inflation. This figure can be changed in the edit assumptions tab.
The projected amount takes into account the legislated increases in the superannuation guarantee (unless you select an employer contribution rate other than the default rate) and assumes that you continue to contribute the selected extra contribution until retirement age (defaulted to age 67).
The calculator lets you model different investment strategies.
The assumed account investment returns per year are:
- 5.0% p.a. (pre-retirement) and 5.0% p.a. (in retirement) for Low/Medium risk
- 5.5% p.a. (pre-retirement) and 6.0% p.a. (in retirement) for Medium risk
- 6.0% p.a. (pre-retirement) and 6.5% p.a. (in retirement) for Medium/High risk (default)
- 6.5% p.a. (pre-retirement) and 7.0% p.a. (in retirement) for High risk
You can also select the "Lifecycle" option, which is intended to model a generic lifecycle strategy, that initially seeks higher risk and return and then lower risk and return as you get closer to retirement age, calculated as the return for High risk up to age 50, a blend of High Risk and Medium Risk between ages 50 and 65, and Medium risk from age 65.
We believe the default, and return assumptions provided for each investment are reasonable as they have been set by the Australian Retirement Trust Actuary having regard to past return for the selected level of investment risk.
All investment returns have been applied net of investment fees and costs and investment taxes.
The projection does not take into account the impact of any additional tax on concessional contributions above the concessional cap after year 1. Where the total before-tax contributions go over the concessional contribution cap (indexed at 4% p.a.), the additional tax payable is taken to be paid from your personal income and not deducted from super. The result of this limitation is that, if you do not pay this additional tax from your personal income, the calculator may overestimate the amount by which your superannuation balance and retirement income could increase by making extra contributions.
More income in retirement
The estimate of income in retirement is based on the projected amount at retirement age, calculated as described above. It does not include the age pension or any investments you may have outside super.
The estimate of income in retirement represents the estimated annual income you could have each year so that you use all your superannuation over the period from retirement age to your retirement income period age (defaulted to age 92).
The projected amount is expressed in today's dollars which means the projected amount has been adjusted by a discount rate to express the balances in today's buying power. The default discount rate used for periods prior to retirement is 4% p.a. which reflects wage inflation and the default discount rate used for periods after retirement is 2.5% p.a. which represents price inflation. The calculator assumes your drawings each year in retirement will increase in line with CPI inflation each year so that your income remains the same each year in today’s dollars. The wage and CPI inflation assumptions can be changed in the edit assumptions tab.
The annual investment return for the period after your selected retirement age is the annual investment return for each investment strategy, plus an adjustment of 0.5% per annum to account for the fact there is no investment tax. If a Lifecycle Strategy is selected, the projection will be based on the Medium/High risk option effective from your retirement age.
Where the account balance would go over the “transfer balance cap” ($1.9 million from 1 July 2024), earnings on the amount above the cap do not include the adjustment, as such amounts would normally remain in the accumulation phase, where investment tax applies.
Fees and insurance
The calculator automatically includes a percentage administration fee of 0.10% p.a. of account balance. Your actual fees may be higher or lower than assumed. You can change the admin fee in our super calculator so you can see how this might affect your super.
We think this assumption is reasonable because it represents the percentage-based administration fee paid by most of the Australian Retirement Trust members we designed this calculator for.
Investment fees and costs are taken into account in setting the assumed investment account returns the calculator shows. The returns shown are net of investment fees and costs and tax, if applicable, and these are not separate assumptions.
Our superannuation calculator does not include any fixed administration fee or any insurance premiums that might apply, because it is only calculating the potential additional benefit from making extra contributions, and the fees you could pay on those extra super contributions. You can ask a financial adviser about how any fixed administration fees and/or insurance premiums might reduce the super calculator's estimates.
Age Pension considerations
This calculator does not take into account the Age Pension, but the amount you have in super, and how you choose to take your super (in a lump sum or as a regular income payments) could affect your eligibility. This means if your extra super contributions affect your eligibility so that you get less from the Age Pension, your total retirement income in our super calculator could be less.
Find out more about how the Age Pension and your super work together.
