Comparison Of Meg And Jo 's Superannuation Funds

913 Words Aug 15th, 2015 4 Pages
As demonstrated in the table above, a smaller personal contribution percentage results in a lower future value, emphasising the importance of personal contributions towards a superannuation funds. Jo’s longer time period of personal contributions of her wage towards her fund resulted in a higher future annuity, despite the same interest rate shared by both Meg and Jo. While Meg, who waited until she was 35 years before making personal contributions, was unable to compound the same interest, and thus reach the same future annuity, as Jo, despite making a higher contribution of 5%.

Recommendations
In comparing the future values between Meg and Jo’s superannuation funds, the longer time period of Jo’s personal contribution resulted in a greater change when increasing the percentage contribution. For example, the difference between the 2% and 4% to the future value in Meg’s superannuation account is of approximately $46,135, while Jo’s future value increases significantly to approximately $88,778. This difference is accredited to the longer personal contribution made by Jo. As such, personal contributions made to a superannuation fund in the initial stages and over a large time period are recommended to maximise a retirement payout.

Limitations and Assumptions
An assumption limiting the accuracy of the aforementioned calculations is the postulation that Meg and Jo’s wage remains at $45,500 throughout employment. If Meg and Jo were to be promoted and given a higher wage, the…
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