With superannuation as the major way of saving for your retirement and market volatility a constant fact nowadays, it seems difficult to reconcile the two. However, if you are thinking of boosting your super to have your dream future, you can never disregard the fact that certain risks need to be taken. But the question is, how much risk should you take? The answer lies in how much return you want – if you want a higher return, then you need to risk more. And by determining how much return you want will answer the underlying question of how much superannuation is enough.

How Much Super is enough?

Figuring out how much super is enough is like solving an endless puzzle unless you take the lifestyle factor into consideration. The lifestyle you want during retirement will dictate how much superannuation contribution you will give now. Let’s look at the different lifestyle scenarios and how much money is needed to maintain a certain lifestyle.

Basic Lifestyle

When you’re thinking of a basic lifestyle, you need around $19,469 a year if you are single and $29,354 per annum if you are a couple. This includes pension supplements and represents 27.7% of Male Total Average Weekly Earnings. If you think you can survive on a 27.7% of an average Australian income, then the figures won’t cause so much of a problem for you.

Modest Lifestyle

A modest lifestyle requires you to live on around $21,957 a year if you’re single, and $31,767 as a couple. This is much better than living on social security alone. It also gives you access to enjoy low-cost activities.

Comfortable Lifestyle

A comfortable lifestyle means that you have an income of around $40,412 every year as a single person, and a $55,316 income per annum as a couple. Having a comfortable lifestyle lets you enjoy more recreational activities, afford private health insurance, higher quality of household goods, and opportunities to travel more often. However, despite the benefits, a comfortable lifestyle is still not spelled as luxury.

Looking at each category, your definition of comfortable may not be what is stated above. If your idea of a comfortable lifestyle is equated as being lavish, then you might need more than the projected $40,000 or $55,000.

To make it much clearer, if you want to enjoy the same lifestyle as the one you are enjoying now, then you need to put 60 to 65 percent of your pre-retirement income into your retirement. So if at present you are living comfortably on $60,000 a year, you might need an income of $36,000 to $39,000 a year. Furthermore, if your pre-retirement income is $120,000 and you want to maintain that lifestyle, then you need around $72,000 to 78,000 a year.

Boosting Your Super

Looking at the figures above would have given you an idea by now about how much you need. The next step then is how to make your super work to its full potential so that you can reap its benefits later when you retire. Some people might have been aware how to do that, but if you are still finding your way to it, there are several ways how to boost your super.

• Salary sacrifice – This is an agreement between you and your employer where you contribute a part of your pre-tax salary to your super instead of taking it as cash. This method will not just boost your super, but it will also entitle you to some tax benefits.
• Combining your accounts – Locating all your lost super and combining them into one single account will save you not only money, but time as well. It can save you time because it will be easier to keep track of everything. It can save you money because you will just have to pay a single management fee.
• Spouse contributions – When you make a voluntary contribution into your spouse’s account, you boost her super and you might become eligible on some tax benefits if your spouse is earning less than $13,800 and meets the necessary requirements.
• Making some investments – Letting your super work through some carefully and strategically chosen investments could make a huge difference to the amount you will get when you retire. It can also save you a lot of money since the Government has made some tax concessions to superannuation savings.
• Self-employed contributions – If you are self-employed, you can save a lot of money since contributions to your super are fully tax deductible. This can make a huge impact on your taxable income.

Your Super and Life Insurance

With all the tax concessions the Australian Government has implemented on superannuation, another area where you can boost not only your super, but your savings as well is by purchasing life insurance through superannuation.

By getting life insurance through your super lets you pay your premiums with pre-tax money as opposed to a standalone policy which makes you pay the premiums from after tax income.

Moreover, using your super fund to pay for your life insurance premiums would let you top up other standalone insurance policies; thus, increasing your cover. It also entitles your beneficiaries to receive tax-free lump sum payments.

However, it should be noted that using your super fund to pay for your insurance premiums can greatly offset the amount of your retirement savings. In order to prevent this from happening, making additional contributions to your super is highly advised.