FAQ: HOW MUCH SHOULD I BE CONTRIBUTING INTO SUPER?

When it comes to thinking about retirement, one of the main questions people ask is 'how much money do I need to retire and live comfortably?'

Obviously, no one can say for sure exactly how much money you'll need and the answer will be different for each individual. Basically, it comes down to how much income you'll want when you're no longer working.

If you're intending to rely on a government age pension be prepared to live frugally. The current pension for a single person is worth 25% of average weekly earnings. You have to ask yourself, is this enough to provide the vision you have for your retirement years?

As a rule of thumb, many financial planners suggest people should aim for a retirement income of between 50% and 70% of pre-retirement salary/wages.

For example, if your salary before retirement was $40,000 a year and you set a retirement income target of 60% of your pre-retirement salary, you will be looking at a figure of $24,000 per annum.

Regardless of what your final salary is, if you want a retirement income equal to about 60% of final salary, it is estimated you will need to save around 15% of your salary/wages for 40 years.

While the government makes it compulsory for your employer to contribute super on your behalf, it is at the rate of 9% of your salary/wage.

Determining the lifestyle you want for your retirement will help you work out if relying on the government age pension and employer super contributions will provide the income you will need.

Making personal contributions to your super can make a big difference to your retirement benefit, particularly when you start early. So the sooner you start to invest, the more you can end up with and the less you'll need to save later.