Currently no superannuation strategy - do I need one yet?

Calculations based on last years PayG income of $99,600 (not incl investments) means I could contribute an extra $10,000 at a net cost of $5829. Effectively out of pocket by a net $5829 but actually gaining an extra $4171 towards super.

The question is do I have a better use for the $5.8k now since I cannot touch it for 36yrs. Which is $209k in total. Compounded in super ends up being

No contributions = $430k
Salary sacrificing the $10k PA = $759k

What I don’t uunderstand and am obviously missing is 36yrs of salary sacrificing $10k is obviously $360k gross.

All the calculators I can find on growth are only showing a difference of $430k to $759k which is only $329k. So over that period, the calculators are literally showing no compounding of the year on year contributions. $360k worth should compound into a lot more

 

Probably as rough as guts but it may provide a ball park figure - assuming no implosions, war, famine, civil unrest and all those other goodies which happen from time to time.

Retirement income | ASIC's MoneySmart

 

Are you allowing for the 15% - 30% tax on the contributions and earnings each year ?

 

Most super calculators I’ve seen incorporate inflation and present the results in today’s dollars. Adjust the inflation settings to zero to get actual projected amounts.

 

Inflation can be 1% and investment growth can be far higher (a multiple many times higher). Look at the Australian economy and property over 10 years even allowing for the reversal trend since 2017 in some areas.

One area these calculators fail is market reversals. If share market reversals occur X times in XX years and property declines Y time in YY years this can massively impact projections. ie a 15% fall in property needs a 17.6% rise to recover. Typically recovery takes M years after N years of stagnation.

This is where the old somersoft PIA software is terrific you can apply these assumptions and adjust them to different portfolios and markets

 

I’m assuming
$10,000.00 per annum increased with a wage growth rate of 2.5% per annum.
Super Growth of rate average 8%
Tax rate 15%
= $1,962,524.81 after 36 years, roughly

 

Now we’re cookin with gas’

That’s much better. I will definitely look into contributing more now then. My calculations I was using must have been way off, I couldn’t work out how every calc I used was ending up with $329k with contributions of over $360k alone.. I’d do better putting it in the bank if that was the case..