Why you should top up your superannuation NOW as experts predict double-digit growth for the year ahead
- Research group Chant West is predicting double-digit super growth for 2020-21
- Median growth super balances have climbed by 14.7 per cent since June 2020
- Growth this financial year to far surpass 8.1 per cent annual average since 1992
Australians are being urged to top up their superannuation with double-digit growth predicted this year.
In the ten months to April 2021, median retirement savings geared towards growth options have climbed by 14.7 per cent, Chant West data showed.
Last month, super balances rose by a healthy 2.2 per cent.
May is set to be another bumper month with the Australian share market on Friday hitting new record highs.
From July 1, the threshold is increasing for topping up superannuation balances at the concessional tax rate of 15 per cent – half the level of income tax.
Chant West senior investment research manager Mano Mohankumar said Australian super balances in 2020-21 were set for the best annual returns in eight years.
Australians are being urged to top up their superannuation with double-digit growth predicted this year. In the ten months to April 2021, median retirement savings geared towards growth options have climbed by 14.7 per cent, Chant West data showed. Predicted are women at the Sydney Opera House
This was particularly remarkable given the Covid lockdowns of 2020 caused the Australian share market to lose a third of its value in one month, during the early stages of the pandemic in March last year.
Australia’s economy was also plunged into recession for the first time in 29 years.
‘Astonishing given the health concerns, disruptions and economic damage caused by Covid-19,’ Mr Mohankumar said.
The predicted return for 2020-21 is set to far surpass the 8.1 per cent average annual growth rate since the advent of compulsory superannuation in 1992.
At the current trajectory, the return for this financial year would most likely be the best since 2012-13 when funds typically delivered returns of 15.6 per cent.
From July 1, the amount employees can voluntarily contribute at the concessional tax rate of 15 per cent rises on that date to $27,500 from $25,000. That is half the marginal income tax rate of 32.5 per cent for those earning between $45,000 and $180,000. Pictured are racegoers at Melbourne’s Flemington Racecourse
When can Australians access their super?
For those born before July 1, 1960, it’s 55
The rises to 56 for baby boomers born between July 1, 1960 and June 30, 1961
It’s 57 for those born between July 1, 1961 and June 30, 1962
It’s 58 for those born between July 1, 1962 and June 30, 1963
It’s 59 for those born between July 1, 1963 and June 30, 1964
It’s 60 for anyone born after July 1, 1964
The analysis is based on median superannuation funds with growth assets comprising 61 to 80 per cent of the retirement savings mix.
From July 1, 2021, compulsory employer super rises to 10 per cent from 9.5 per cent.
The amount employees can voluntarily contribute at the concessional tax rate of 15 per cent rises on that date to $27,500 from $25,000.
That is half the marginal income tax rate of 32.5 per cent for those earning between $45,000 and $180,000.
The Association of Superannuation Funds of Australian recommends someone have at least $535,000 in savings for a comfortable retirement.
Many Australians are a long way from achieving that savings goal with official Australian Bureau of Statistics data showing average super balances of just $286,800 in the final decade before retirement.
Tax office data showed women aged 60 to 64 had even less, with average balances of $280,000 compared with $345,000 for men in the years just before retirement.
Colonial First State’s data on its 750,000 superannuation accounts, across all adult age groups, showed average balances of $82,163 in December 2020.
For women it was $73,139, a 17.8 per cent gap compared with the average male balance of $88,934.