When it comes to superannuation, it pays to have a target in mind when you're putting money away for the future.
As the old adage says, failing to plan is planning to fail.
The good news is that even if you start relatively late, there are strategies you can use to boost your super to a level where it will afford you a comfortable retirement.
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How much superannuation do you need for $1500 per week in passive income?
Today we're looking at the scenario where you are aiming to generate $1500 per week in passive income from your superannuation.
So to start with, is this considered a comfortable retirement? The short answer is yes.
The Association of Superannuation Funds of Australia has calculated how much is needed for singles and couples to have a comfortable retirement, and the figures come out at $55,923 for singles and $78,566 per year for couples.
These figures assume you own your own home and will draw a part pension, but they are well under the $1500 per week, or $78,000 per year level we are looking at.
So, how much superannuation would you need to generate this amount?
Let's assume you can generate a 10% return on your investments. In this case, you'd need a $780,000 superannuation balance.
If you were generating just 5% you would need a balance of $1.56 million.
I'd argue that somewhere in the middle is achievable over time. So if you were generating a 7.5% return, you'd need a balance of $1.04 million.
What shares might help you achieve your passive income goal?
In terms of the shares you might want to have in your portfolio, you could look at listed investment trusts such as Charter Hall Retail REIT (ASX: CQR), which brokers expect to pay a return of better than 6% through to 2030, or Dexus Industria REIT (ASX: DXI), which is currently paying a healthy 6.97% yield.
Alternatively, financial services company Regal Partners Ltd (ASX: RPL) is paying a fully franked 7.42%.
Among the Wilson Asset Management funds, WAM Strategic Value Ltd (ASX: WAR) is paying a yield of 5.65%, while WAM Active Ltd (ASX: WAA), recently increased its dividend and is paying out 6.94%.
Among the banks, Westpac Banking Corp (ASX: WBC) is paying 4.35% fully franked, while Bank of Queensland Ltd (ASX: BOQ) is paying 6.19% also fully franked.
Among Australian blue-chip stocks, Telstra Ltd (ASX: TLS) is paying 4.39%, and miner BHP Group Ltd (ASX: BHP) is paying 3.19%.
How to increase your superannuation balance
If you're keen to increase your superannuation balance, investigate the viability of making extra concessional contributions up to the $32,500 cap, with these contributions taxed at just 15%.
The $32,500 cap includes any contributions from your employer and amounts contributed through salary sacrifice.
If your superannuation balance was under $500,000 in the last financial year, you can also carry forward up to five years' worth of unused concessional contribution amounts. You can find out how much you can contribute under this rule by logging in to your myGov account.
Non-concessional contributions of up to a further $130,000 can be made each year also.
