The following notes set out further details about the assumptions used in the calculations carried out by this calculator.
General wage inflation
By default, wages are assumed to increase by 3.5% p.a. in each year. All results are expressed in today's dollars by discounting at this rate. You can change the assumed rate on the "Assumptions" tab. This calculator relies on the exemptions under ASIC Corporations (Generic Calculators) Instrument 2016/207 and does not
advertise or promote a specific financial product. Rice Warner online calculators use an assumed wage inflation rate of 3.5% to calculate the present value of estimates. Rice Warner views this as a suitable assumption as at 1 July 2019 and advises that this inflation rate of 3.5% includes a component of 1% that reflects the cost of meeting increases in community living standards
Your salary is assumed to increase each year in line with the assumed level of general wage inflation. Income tax is calculated by applying personal income tax rates plus the Medicare Levy (but not the Medicare Levy Surcharge) to your projected taxable income in each projection year. The personal income tax rates used for the 2019/20, 2020/21, 2021/22, 2022/23, 2023/24 and 2024/25 projection years are the legislated tax rates for those years as at 1 July. In each projected year subsequent to 2024/25, the personal income tax brackets (and Medicare Levy thresholds) are assumed to increase in line with the assumed level of general wage inflation, and the personal income tax rates are assumed to remain unchanged. You are assumed to be an Australian resident for taxation purposes. In calculating the Medicare Levy, the individual income thresholds are assumed to apply, and the family income thresholds are assumed not to apply.
The Medicare Levy is assumed to be 2% of taxable income for the 2019/20 tax year and subsequent years.
In each projection year, your entitlement for the Low Income Tax Offset (LITO) is estimated based on your taxable income. The rates and thresholds used to calculate LITO in the 2019/20 projection year are assumed to be the legislated rates and thresholds as at 1 July 2019. The maximum amount of LITO and the income threshold over which the LITO starts to reduce are assumed to increase each year subsequent to 2019/20 in line with the assumed level of general wage inflation.
In each projection year in which you are determined to be eligible for an Age Pension, your entitlement for the Seniors and Pensioners Tax Offset (SAPTO) is estimated based on your rebatable income. Your rebatable income is assumed to equal your taxable income plus any salary sacrifice contributions. The maximum amount of SAPTO is assumed to increase each year in line with the assumed level of general wage inflation.
No allowance has been made for income from any other sources, including your spouse's income.
By default, you are assumed to receive employer superannuation contributions of 9.5% of salary, subject to a maximum of your concessional contribution cap. You can change the assumed employer contribution rate and your current level of salary sacrifice (concessional) and after-tax (non-concessional) contributions on the "Assumptions" tab. By default, in each projection year, if your employer's contribution rate is below the assumed Superannuation Guarantee (SG) Charge Rate for that year, your employer's contribution rate is increased to the assumed SG Charge Rate in that year. You can disable this functionality on the "Assumptions" tab. The SG Charge Rate assumed to apply in each year is as follows:
||Superannuation Guarantee charge rate (% p.a.)
|2016/17 - 2020/21
|2025/26 and thereafter
It is assumed that your employer contributions are not affected by any salary sacrifice contributions.
Any contributions entered by you (both employer and personal contributions) are assumed to increase in each projection year in line with your salary. Where a calculated contribution amount exceeds the relevant contribution cap, the assumed contribution is reduced to the amount of the contribution cap to ensure the contribution is not excessive.
The concessional and non-concessional contributions limits of $25,000 and $100,000 respectively are subject to indexation. The general transfer balance cap starts at $1.6 million for 2017/18, and will be indexed periodically in line with the consumer price index (CPI), rounded down to the nearest $100,000. Contributions are assumed to be spread evenly across the year on a monthly basis. Contributions are assumed to be spread evenly across each projection year on a monthly basis and are to be paid until the retirement age you enter.
No allowance has been made for spouse contributions.
Concessional contributions are assumed to be subject to tax at 30% in the super fund for individuals with income including concessional contributions over $250,000, and at 15% otherwise. Where an individual's income exceeds $250,000 a year due to the inclusion of their concessional contributions, the higher tax rate of 30% is assumed to apply to the excess over $250,000, with 15% applying to the balance of concessional contributions.
For each projection year in which you make a non-concessional contribution, your co-contribution eligibility is assessed and a co-contribution is added to the superannuation account if applicable.
Your eligibility is assessed by comparing your projected assessable income amount plus salary sacrifice contributions to the projected co-contribution thresholds, and applying the standard rules for calculating the co-contribution. It is assumed you have no reportable fringe benefits.
It is assumed you meet the other eligibility criteria.
The lower co-contribution threshold is assumed to increase in line with the assumed level of general wage inflation each year. The co-contribution matching rate is assumed to be 50c per dollar contributed and the maximum co-contribution is assumed to be $500. The upper co-contribution threshold is assumed to be $15,000 more than the lower co-contribution threshold. As assumptions have been made about your eligibility for the co-contribution, including your "relevant income", the projected co-contribution may not represent your actual co-contribution entitlement.
Any co-contribution payable is added to your superannuation account on 30 June in the respective projection year.
Low-Income Superannuation Tax Offset (LISTO)
For each projection year on or after 1 July 2017, in which it is assumed you or your employer would make a concessional contribution, your eligibility for the LISTO is assessed and a LISTO is added to the projected superannuation account if applicable.
In each case, your eligibility is assessed by comparing your calculated adjusted taxable income in the relevant year to the LISTO income threshold, and applying the standard rules for calculating the LISTO. It is assumed you have no reportable fringe benefits and that you meet the other LISTO eligibility criteria.
The LISTO income threshold and maximum payment amount are assumed to remain constant over the projection period.
Any LISTO payable is added to your projected superannuation account on 30 June in the respective projection year.
Low-Income Tax Offset (LITO)
In each projection year, your entitlement for the Low Income Tax Offset (LITO) is estimated based on your taxable
income. The rates and thresholds used to calculate LITO in the 2019/20 projection year are assumed to be the legislated
rates and thresholds as at 1 July 2019. The maximum amount of LITO and the income threshold over which the LITO starts
to reduce are assumed to increase each year subsequent to 2019/20 in line with the assumed level of general wage
Fees and insurance premiums
The "Investment returns" section on the Assumptions page includes an implicit allowance for investment management fees assumed to apply to each investment strategy. The following additional default fees and insurance premiums are assumed to apply. You can change the assumed fees and insurance premiums on the "Assumptions" tab.
||$60 per year
||$60 per year
||$375 per year
Fees are assumed to be tax-deductible at 15% in the fund. Fees and insurance premiums are assumed to be deducted on a monthly basis.
Any fees expressed as a dollar amount and insurance premiums are assumed to increase in line with the assumed level of general wage inflation. Other fees are assumed to remain constant in percentage terms over the projection period.
It is assumed you will retire at the end of the financial year in which you reach your nominated retirement age.
It is assumed you will have reached your preservation age or will have met a relevant condition of release as at your nominated retirement date. If this is not the case, you will not be able to access your superannuation benefits until after you have reached your preservation age or satisfied a relevant condition of release. You should check your preservation age before using the calculator.
During retirement, the calculator will use your pension withdrawals and Centrelink payments in order to reach your goal retirement income.
It is assumed you will commence an account-based pension with your superannuation savings balance at the time of full retirement. Pension payments are assumed to be made on a monthly basis.
Pension payments after age 60 are assumed to be tax-free. For the purpose of calculating taxation on pension withdrawals before age 60, the pension is assumed to commence after 1 July 2007 and hence the proportioning rule applies which divides the pension income into a tax-free and taxable component.
If you have chosen to include the Age Pension in the projection (you can set this on the "Assumptions" tab), your Age Pension amount is estimated in each projected year and added to the projection. Your Age Pension amount is assumed to be subject to the income test reduction rate of 50c per dollar over the threshold. If you expect to have a partner at your intended retirement age, it is assumed that your partner has identical levels of income and assets as you for age pension estimates. The Age Pension payment is assumed to be included in your assessable income for taxation purposes.
Your salary is assumed to be included in the income test. In assessing your income for the income test, the Work Bonus is assumed to apply to salary income.
It is assumed that any pensions commence on or after 1 January 2015, and that the assumed income from the account based pension for purposes of the income test is based on the standard deeming rules.
Your pension account balance is assumed to be included in the assets test.
The income test and assets test thresholds are assumed to be indexed at the end of each projection year in line with the assumed level of general wage inflation.
Any Centrelink payments which cause your annual retirement income to exceed your goal income are not shown in the calculator results.
The Australian Life Tables 2015-17 are used as a basis for illustrating how long individuals could be expected to live, as well as for determining your life expectancy for taxation purposes.
Life expectancy indicators are rounded up to whole numbers of years.
For the purposes of determining income tax, contribution caps and minimum and maximum pension payment amounts, it is assumed that the projection is run on the first day of the financial year and that you are your current age for the entire financial year.
It is assumed that you have provided your tax file number to your super fund.
It is assumed your superannuation fund is a taxed accumulation fund. This calculator is not suitable for members of an untaxed fund or for members of a defined benefit fund.
The results are a projection only and are not guaranteed.