Susan accelerates her super success
Article last updated: 20/05/09
Susan, a 45-year-old IT manager from Northern NSW, earns $100,000 per annum. With both of her daughters likely to leave home in the next five years and her mortgage paid off, she has started focussing on her eventual retirement, which she ideally wishes to start in her late 50s.
To help boost her super, which is currently valued at $260,000, she plans to salary sacrifice $15,000 per year in addition to the 9 per cent contributions already made by her employer. Including her mandated superannuation contributions, she will make $24,000 per annum in ongoing contributions to her superannuation fund.
Importantly, Susan understands that how she invests her super can have a big impact on the amount of money she has for retirement. But because she doesn’t really understand how the stock market works she is cautious when it comes to investing her money. As a result she has, until now, had her superannuation invested in a retirement savings account at her local bank.
Her adviser recommends North Personal Superannuation selecting the 10-year Protected Growth guarantee term with Investment strategy 2 and investing in a growth-styled asset allocation.
The graph shows the result of Susan’s North Personal Superannuation account over the 10-year term from 31 March 1998 to 31 March 2008. The grey line shows the result of depositing the money in the bank1.
At the end of the 10-year period Susan had a superannuation balance of more than $780,000.
Better yet, thanks to the Protected Growth guarantee, when the market started to fall in 2002–03 and again towards the end of 2007, her Account Value was fully protected.
1 The cash return rate is based on the 90-day Bank Bill rate over the selected timeframe.
| Name | Susan |
| Current age | 45 years |
| Initial contribution | $260,000 |
| Salary | $100,00 pa (incl super) |
| Salary sacrifice | $15,000 pa |
| Annual contribution | $24,000 (incl $9,000 super guarantee and salary sacrifice) |
| Asset allocation | Investment Strategy 70 |
| Projection | 31 March 1998 - 31 March 2008 |
Important information
The case study above is a hypothetical scenario based on past performance and is not meant to illustrate the circumstances of any particular individual. Past performance is not necessarily indicative of future performance. While we believe the information contained herein is correct, no warranty of accuracy, reliability or completeness is given and, except for liability under statute which cannot be excluded, no liability for errors or omissions is accepted.
The results depicted are based on specific assumptions. Changes in any of the assumptions may lead to a significant change in the results. While AXA Australia has endeavoured to employ assumptions that are reasonable, the assumptions cannot, by their nature, cover all situations and circumstances.
Some of the assumptions adopted represent a simplification or average result over time and thus the results produced are likely to be less volatile than may be experienced in real life.
These results do not provide financial, investment or taxation advice or recommendations and should not be relied upon as such. The results do not take into account the investment objectives, financial situation and circumstances of any particular person.
Projections are based on the various assumptions including but not limited to:
• The guarantee and administration fees are included. These will depend on the guarantee timeframe and the Account Value. Adviser fees are not included.
• Investment management fees are 0.45%.
• Investment returns are based on historical index data. For details on investment strategies and portfolio construction go to www.north.axa.com.au/casestudies.
Set pension amounts are assumed to increase by 2.6% per annum. This assumed rate is based on the five most recent previous years’ Consumer Price Index (CPI) data (Australian Bureau of Statistics, February 2007).
The results of this case study have been generated using the North Illustration Tool, which employs a range of general assumptions to model historical market scenarios. For full details please see www.north.axa.com.au/casestudies.
