At 23, Katarina has come to you for financial advice. She has just finished her university studies and started full time work, earning $55,000 per annum. She realises that she needs to provide for her retirement. She has advised you that that she plans to retire at 65, and wants to be able to live for at least 20 yearsoff the money that has built up in her superannuation account.

Part 1: Superannuation

Select a superannuation fund site to investigate and select an investment option into which Katarinas money will be invested. Select a rate of return that you will use for your original calculations, and provide brief reasons for your selection. Decide on the frequency of payments being made into the account by the employer. Include evidence of the investment information in your appendix.

Sites such as the one found at the link below provide a range of superannuation fund rate of return information:

http://www.supersa.sa.gov.au/our_products/triple_s/investment_performance

Include evidence of the rate information in your appendix.

Part 2: Account balance at retirement (how much Katarinawill have at age 65 years)

Calculate the account balance at retirement that Katarina would have in her superannuation fund if only the compulsory employer contributions were being made into the account until her retirement. Assume that the compulsory employer contributions are 9.5% of salary.

The Task

At 23, Katarina has come to you for financial advice. She has just finished her university studies and started full time work, earning $55,000 per annum. She realises that she needs to provide for her retirement. She has advised you that that she plans to retire at 65, and wants to be able to live for at least 20 yearsoff the money that has built up in her superannuation account.

Part 4: Effect of inflation

Katarina currently takes home $1,700 pay a fortnight after tax.Calculate how muchKatarina would need to receive from her annuity at 65 years of age to be receiving an equivalent amount,taking into account inflation over this period. Include evidence of the CPI rate chosen in your appendix.

Compare this to the regular income you found that Katarina would have in Part 3.Will Katarinabe able to live comfortably in her retirement?

Part 5:Further investigations

Undertake further investigations for Katarina to provide her with advice on what might affect the final account balance in her superannuation fund. Your investigations may include:

Making personal contributions to her superannuation fund

Investing in different investment optionsover her career, e.g.a growth option in the beginning and a conservative option near retirement

The effect of wage increases/decreases

A change of retirement age

The effect of taking time off work e.g. to travelor for a change of career

A change to the CPI rate and if it will affect the amount that Katarina would need to receive in retirement.

These calculations should look at both how much her account balance will be at retirement age as well as how much she will be able to draw as a regular income over the 20 years throughout retirement.