‘Why do online superannuation predictors give wildly different outcomes?’

Dec 15, 2018
Asking how long your superannuation savings may last can be like asking 'how long is a piece of string?' - the answer is, 'it depends'. Source: Getty

Q: I have been using some of the superannuation predictors that forecast how much money you may be left with by a certain age if drawing a specific income, but the results are confusing. Why do super calculators on the internet give different outcomes with the same information?

A. It’s those pesky asterisks and notes at the bottom! These point to some of the assumptions made in modelling your numbers, and tweaking these assumptions can make a huge difference. A 1 percent difference in an assumed earning rate could take years off the ‘how long will it last’ model. But remember a few things. These sites are typically designed to scare you into investing more so that the calculator provider can collect more fees on your investments.

They also often exclude the facts about retirement in Australia. For example, there is a Centrelink system that, for the vast majority of retirees, pays either a full or part Age Pension. And no, it’s not ending. Treasury forecasts out to 2050 show the Age Pension is alive and well even then.

The reality is that as we age, we will probably need less income. Ask yourself how much less does 90-year-old Aunty Edna spend now, compared to when she was 70? And lastly, most of us adopt the philosophy that the kids can have what’s left, not leave most of it to them. Most online modelling calculators ignore all of these realities.

If you have a question for Starts at 60’s money experts, email it to [email protected]

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.

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