Play the video
[Margie is sitting out in surf on her board facing the horizon]
<Super> The 10/30/60 Revelation
Margie: I’m no spring chicken but I just love surfing every day. Best surfer our there is always the one with the biggest smile on their face.
[Music picks up as Margie paddles for a wave and surfs it]
Margie: That buzz that you get just from catching a wave is a really lovely feeling just to be at one with the ocean.
<Super> It may not look like it, but this is Margie earning up to 60% of her retirement income.
[Margie comes in from the surf, up the beach, drying off and pouring a cup of tea from her thermos, which she enjoys sitting on the beach, looking out to sea]
Margie: The 10/30/60 rule was a real revelation, it’s actually really surprising that the bulk of your retirement income could be generated after the day you stop working, through earnings on your super.
[Evan sits in the Sunsuper Office]
Evan: Okay the 10/30/60 rule is actually quite simple.
<Super> Evan Poole, BA CFP Manager, Comprehensive Advice Services, Sunsuper
Evan: Only 10% of the money you will have in retirement will come from contributions made while you’re working. 30% comes from the interest earned on your savings while you’re still working. But here’s the surprise – the majority, up to 60% of it, comes from interest earned in the years after you retire. Knowing this can really change your perspective.
[Margie hangs up the washing. Her husband Fred calls out]
Fred: Come and have some breakie Margie
Evan: A lot of people might tell you to take your money out of super and invest it elsewhere, but finding and sticking with the right fund is crucial to continue to maximise your earnings — and total balance - right through retirement.
[Margie throws a ball to her dog]
Margie: After you retire you want your super to be doing all the hard work so you can get to do what you love doing. I feel very fortunate to be doing what I love every day.
[Margie puts her board on her car roof rack, waves goodbye to Fred and heads off for a surf]
<Super> Sunsuper logo. The 10/30/60 Revelation. Check it out sunsuper.com.au/revelation
<Disclaimer> Products issued by Sunsuper Pty Ltd (ABN 88 010 720 840 AFSL No. 228975). Outcomes not guaranteed. Consider Product Disclosure Statement before deciding. For a copy call 13 11 84.
Choose the values closest to your situation to see how up to 60% of your retirement income could be
generated after the day you stop working - from earnings on your super.
The total income you draw from super in retirement could comprise:
Attributed to super contributions made while you're working
Attributed to interest earned on your super while you're working
Attributed to interest earned on your super after you stop working
*The outcome is a general indication only and not guaranteed. The model does not take into account all of your personal objectives, financial situation or needs. Accordingly, you should consider the outcome having regard to your personal objectives, financial situation and needs before acting. Your 10/30/60 percentages and total income in retirement may differ from the outcomes shown if the assumptions used in the model do not match your circumstances. Calculation by Sunsuper based on the 10/30/60 rule (see Russell Investments: The 10/30/60 Rule. January, 2015).
The model assumes past contributions starting at age 20. These are based on:
- historical Super Guarantee rates from 1992 and award contribution rate of 3% of salary prior to 1992, and
- the nominated salary growing to the current level assuming a salary increase rate of 3.75% p.a.
The remainder of the current super balance is allocated interest earned on super while working.
The model assumes future contributions at the legislated Super Guarantee rates less contributions tax.
The projection of the super balance to age 65 assumes:
- investment returns of 7.0% p.a. (net of tax),
- salary increase rate of 3.75% p.a.,
- administration fees of $1.50 p.w. plus 0.1% of account balance, and
- insurance premiums of $5 p.w. at current age increasing in future years at 2.5% p.a. and ceasing at age 65.
The projection of retirement income from age 65 assumes:
- investment returns of 7.6% p.a.,
- administration fees of $3 p.w. plus 0.1% of account balance,
- payments indexed at 3% p.a., and
- account balance of nil at age 90.
The pension payment amounts do not take into account the legislated minimum pension payments.
The actual percentages are calculated based on the total contributions made while working, interest earned on super while working and interest earned on super after stop working. The calculation of the dollar amounts attributed to each of the above is based on the calculated percentages applied to the value of the total pension payments expressed in today’s dollars. The results are shown in “today's dollars" so they are consistent with today's living standards. For the period prior to age 65 the discount rate is at 3.75% p.a., made up of 2.5% for inflation and 1.25% for the cost of rising living standards. For the period after age 65 the discount rate is 3.0% p.a., made up of 2.5% for inflation and 0.5% for the cost of rising living standards.
How does the 10/30/60 Revelation work?
The 10/30/60 Revelation is actually quite simple. Only around 10% of the money you may draw from your super in retirement will come from contributions you make to your super while you’re working. Around 30% can come from the interest earned on your savings while you’re still working. But here’s the surprise – the majority, up to 60% of it, can come from interest earned in the years after you retire.
The Revelation only works if you leave your balance invested right through retirement. And the Revelation works because of the effect of compound interest. Compound interest or compounding interest is interest earned on your contributions, plus interest earned on the interest earned on your contributions – so interest earned on interest. It means the longer you leave your money invested, the longer you will earn interest for, the larger the amount you will earn interest on, and therefore the larger your total balance is likely to be.
See the 10/30/60 Revelation in action
See an example of how the 10/30/60 Revelation could help
maximise super earnings right through retirement.
Age: 50 Salary: $80K Super balance: 180k
Attributed to super contributions made while you're working$110k
Attributed to interest earned on your super while you're working$200k
Attributed to interest earned on your super after you stop working$410k
The outcome is a general indication only and not guaranteed. Your 10/30/60 percentages and total income in retirement may differ from the outcomes shown if the assumptions used in the model (as shown above) do not match your circumstances.
How to make the most of the 10/30/60 Revelation at any stage of life
Add to your super to maximise your 10%
Start early and add to your super while you’re working. Then let the full effect of compound interest grow your balance for the future.
Choose the right investments to boost your 30%
Choose the right investment option for your super. Thanks again to compound interest, just a small increase to the return on your super investment could make a big difference over the long run.
Keep your money invested to enjoy your 60%
Find and stick with the right super fund right through your retirement. Make sure compound interest keeps working hard for you in retirement by accessing your super through a super pension like a Sunsuper Income account.