Kim 27 years
Physiotherapist
Not ready to commit to super yet
Ill get to know super better when Im older.
If Kim retires at age 65 having made no additional contributions above what her employer must provide, her retirement standard of living will drop by 35 per cent.
Just like Carrie from Sex in the City, Kims life revolves around working and living in a major capital city. Kim is a physiotherapist for a national football team and she gets paid $67,300 a year to do what she loves. When shes not working, Kim leads a busy social life catching up with friends and playing sport.
Kim earns a great salary for her age and her employer contributes the basic 9 per cent super. What she doesnt realise is that under the basic contribution system, when she retires at 65, her living standard in retirement will be 35 per cent lower than her pre-retirement living standard.
Before she turns 40, Kim wants to fulfil two goals travel the world and start a family. If Kim, take five years out of the workforce to achieve these goals, and still retires at 65, she will experience a post-retirement standard of living that is even lower. As a comparison, if Kim only worked up to age 60 i.e. for 35 years from age 25 her living standard would be 57 per cent lower than her pre-retirement living standard. Considering the great standard of living that Kim enjoys now, this would be very difficult for her to deal with.
If Kim personally contributes another 3 per cent on top of her employers compulsory contribution of 9 per cent, her post-retirement living standard would be only slightly lower (15 per cent) than her pre-retirement living standard. If she contributed 6 per cent, she would actually be 10 per cent better off as well as having more saved up if she wants to retire before 65. By contributing more throughout her working life, Kim will have more of a buffer to take time out and achieve her goals while saving enough to maintain a reasonable standard of living in retirement.
