Retirement Income Simulator
Estimate your annual income in retirement based on your super balance, contributions, and investment strategy.
Quick Use Samples
Retirement Variables
Estimated annual return: 7%
Retirement Summary
Probability of Success
On track for a comfortable retirement.
Over the next 32 years, your superannuation is projected to grow to $1,979,148 by age 67. This is based on your current balance, employer contributions from your $80,000 salary, plus $0 in voluntary contributions each year. The projection assumes an average annual return of 7% from a 'balanced' investment profile. This could provide an estimated annual income of $98,957 in retirement.
Super Balance Projection
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What is a Retirement Income Simulator?
A retirement income simulator is a tool that projects how much money you will have in superannuation at retirement, and how much income that can provide you with each year. It helps you to understand if you are on track to afford the lifestyle you desire in retirement.
Behind the Formula
The simulator uses a compound growth formula to project your future super balance. It starts with your current balance, then adds your annual employer and personal contributions, and applies an assumed investment return for each year until you retire. It then uses a simple withdrawal rule (like 5% of the balance) to estimate the annual income your nest egg could generate.
Expert Insights
- The three most powerful levers you have to change your retirement outcome are: how much you save, the investment return you earn, and the age you retire. This simulator lets you experiment with all three.
- Small fees can have a huge impact. A 1% difference in annual fees can reduce your final retirement balance by up to 20% over a 40-year career. It's crucial to choose a low-cost super fund.
- Don't forget about the Age Pension. For many Australians, the government Age Pension will be a significant part of their retirement income, supplementing what they draw from their own super.
Actionable Tips
- Use this simulator to set a clear retirement goal. Seeing the final number you need to aim for can be a powerful motivator to increase your savings.
- Review your superannuation investment strategy. If you are young and have a long time until retirement, a 'High Growth' option is likely to produce a much better outcome than a 'Conservative' or 'Balanced' option.
- Consider making extra contributions. Even a small, regular extra contribution from your salary can make a massive difference to your final balance thanks to the power of compounding.
Real-World Examples
The impact of starting early
Two people want to have $1 million at retirement. One starts saving at 25, the other at 35. The simulator shows that the person who started 10 years earlier can contribute significantly less each month to reach the same goal, thanks to the extra decade of compounding.
Deciding when to retire
Someone is planning to retire at 60. The simulator shows them their estimated income will be $40,000 a year. By experimenting with the tool, they see that working just 5 more years to 65 could increase their annual retirement income to over $55,000.
Choosing an investment option
A 30-year-old switches their super from a 'Balanced' option (projected 6% return) to a 'High Growth' option (projected 8% return). The simulator shows this simple switch could result in a final balance that is hundreds of thousands of dollars higher at retirement.
Glossary of Terms
Superannuation
Australia's compulsory retirement savings system, where employers contribute a percentage of your salary to a dedicated investment fund.
Compounding
The process of earning returns on not just your original investment, but also on the accumulated returns from previous periods.
Withdrawal Rate
The percentage of your retirement savings that you withdraw each year to live on. A 'safe' withdrawal rate is one that doesn't deplete your funds too quickly.