No Credit Needed did an interesting post regarding what amounts can be accumulated by Americans maxing out their retirement contributions. In this post I show similar calculations from the Australian perspective, “What If… You Make Maximum Retirement Contributions For 20, 30 or 40 Years?”
Notes about the charts -
Annual contributions are held steady at 2008 maximums ($50,000 in tax-deducted contributions [employer SGL contributions and salary sacrifice], and $150,000 in undeducted contribution]
Returns are annual and do not fluctuate
Interest is calculated using year-end-balance
I used percentages between 6% and 14% and a span of 1 to 40 years.
Tax on tax-deducted contributions is 15%. Tax on interest is calculated at 15% (it would be lower for most people as capital gains are taxed at 10% within superannuation during accumulation phase, and 0% if realised during in pension mode).
Copyright Enough Wealth 2007