Superannuation is Australia's compulsory retirement savings system — employers must contribute 12% of your ordinary time earnings on top of your wage into a nominated fund. The balance compounds tax-effectively over your working life.
- 1. Employer contributions. From 1 July 2025, the Superannuation Guarantee rate is 12% of ordinary time earnings. This is paid on top of your wage unless the job description says "inclusive of super."
- 2. The 7% assumption. Australian super funds have averaged around 7–9% p.a. over the long run (balanced options). 7% is a conservative planning rate. Real returns compound tax-effectively inside super at 15% earnings tax (lower than most people's marginal rate).
- 3. The power of compounding. At 7%, money doubles every ~10 years (rule of 72). A 30-year-old with $80,000 today will see that balance alone grow to over $600,000 by 70 — without any additional contributions.
- 4. Preservation age. You can access super from age 60 if you've retired, or from 65 regardless of employment status. The pension age for Age Pension is 67.
- 5. Extra contributions accelerate growth. Voluntary concessional contributions (salary sacrifice) or non-concessional after-tax contributions both boost the compounding base — even modest amounts early create large differences at retirement.