Australian Retirement & Super Glossary
Every term below is something the Independent Means modelling tool actually calculates with. Where a definition includes a dollar figure or rate, it is produced at build time from the same source file the running application reads, so this page and the app cannot disagree. For how the calculations work end to end, see the Methodology page; for what each stage of the wizard asks, see the FAQ.
FIRE (Financial Independence, Retire Early)
A savings approach aimed at accumulating enough invested assets that investment returns can cover living expenses indefinitely, making paid work optional well before traditional retirement age. The central quantity is the FIRE number: the portfolio size at which annual spending can be sustainably drawn from investments.
FIRE number
The total invested assets required for investment returns to sustainably fund a target level of annual spending. It is commonly estimated by dividing target annual spending by a safe withdrawal rate: at a 4% withdrawal rate, a $60,000 annual spend implies a FIRE number of $1,500,000. The figure is an estimate that depends heavily on the withdrawal rate and return assumptions used.
Coast FIRE
The point at which existing retirement savings, left invested and untouched, are projected to grow to a full retirement balance by a chosen retirement age without any further contributions. Someone who has reached Coast FIRE still needs income to cover current living expenses, but no longer needs to save for retirement for the projection to hold.
Safe withdrawal rate (SWR)
The percentage of a portfolio drawn as income in the first year of retirement, with the dollar amount typically indexed to inflation thereafter, chosen so the portfolio is unlikely to be exhausted within the retirement period. The widely cited 4% figure derives from historical United States market studies; it is a rule of thumb, not a guarantee, and different assumptions produce different sustainable rates.
Superannuation Guarantee (SG)
The minimum percentage of ordinary time earnings an Australian employer must contribute to an employee's superannuation fund. The Superannuation Guarantee rate is 12%, its legislated ongoing level since 1 July 2025.
Concessional contributions cap
The annual limit on before-tax superannuation contributions (employer Superannuation Guarantee plus any salary sacrifice and personal deductible contributions), taxed at 15% inside the fund. For FY2026-27 the general concessional cap is $32,500 per person. Contributions above the cap are added to assessable income and taxed at the individual's marginal rate, less a 15% offset.
Non-concessional contributions cap
The annual limit on after-tax superannuation contributions, set at four times the concessional cap, $130,000 per person for FY2026-27. Under the bring-forward rule, eligible individuals under 75 can contribute up to three years of caps in one year.
Carry-forward concessional contributions
Unused concessional cap amounts from up to five previous financial years that can be contributed on top of the current year's cap, available to individuals whose total superannuation balance was below $500,000 at the prior 30 June. The mechanism allows a person with an irregular income history (career breaks, self-employment, windfalls) to catch up on before-tax contributions.
Salary sacrifice
An arrangement where an employee directs part of their before-tax salary into superannuation instead of receiving it as take-home pay. The sacrificed amount is taxed at the 15% contributions rate inside the fund rather than at the individual's marginal income tax rate, and counts toward the concessional contributions cap.
Division 293 tax
An additional 15% tax on concessional superannuation contributions for high earners, applying once combined income for surcharge purposes plus concessional contributions exceeds $250,000. It effectively halves the tax concession on super contributions for income above the threshold, and the ATO bill is typically paid personally rather than from the fund.
Preservation age
The age from which superannuation can generally be accessed, subject to meeting a condition of release such as retirement. The preservation age is 60 for everyone born on or after 1 July 1964. Accessing super before preservation age is only possible in limited circumstances defined by law.
Transfer Balance Cap
The lifetime limit on the amount of superannuation that can be transferred into the tax-free retirement (pension) phase: $2,100,000 for FY2026-27, indexed in $100,000 increments with CPI. Amounts above the cap remain in the accumulation phase, where earnings are taxed at 15%.
Account-based pension
A retirement income stream drawn from superannuation savings after a condition of release is met. Investment earnings inside an account-based pension are tax-free, and the government sets age-based minimum percentages of the balance that must be drawn each year, starting at 4% below age 65 and rising with age.
Age Pension
A means-tested government income support payment for Australians from age 67. Entitlement is reduced under both an assets test and an income test, with the test producing the lower payment applying. Many retirees receive a partial rather than full pension, and entitlement can begin partway through retirement as assets are drawn down.
HECS/HELP repayment
The compulsory repayment of Australian higher education loans through the tax system once repayment income passes a threshold, $69,528 for FY2026-27. Since 1 July 2025 repayments are calculated on a marginal basis, like income tax brackets: each dollar within a band is charged at that band's rate, rather than one flat rate applying to the whole income.
Franking credits
Tax credits attached to dividends paid from Australian company profits that have already borne company tax. Shareholders use franking credits to offset personal income tax on the grossed-up dividend, and credits exceeding tax payable are refundable for individuals and superannuation funds.
Negative gearing
The situation where the deductible costs of an income-producing investment, most commonly interest on a rental property loan, exceed the income it generates, producing a loss that reduces the investor's taxable income. The strategy relies on capital growth ultimately outweighing the accumulated after-tax losses.
Debt recycling
A strategy of progressively replacing non-deductible home loan debt with investment debt: repayments reduce the home loan, the freed-up equity is redrawn to invest in income-producing assets, and interest on the redrawn portion becomes tax-deductible. Total debt stays constant while its composition shifts from non-deductible to deductible; investment risk is taken on in exchange.
Medicare Levy Surcharge
An additional levy of 1% to 1.5% of income on Australian taxpayers above an income threshold, $105,000 for singles in FY2026-27 and double for families, who do not hold hospital-level private health insurance. It is separate from, and in addition to, the standard 2% Medicare Levy.
Monte Carlo simulation
A modelling technique that runs a projection many times, commonly 1,000 or more, with investment returns varied randomly around an expected average each year, producing a distribution of outcomes rather than a single line. The result is expressed as a probability, such as the percentage of simulations in which retirement savings last to a given age, which conveys the uncertainty a single-scenario projection hides.
Net worth
The total value of everything owned (superannuation, property, shares, cash and other investments) minus everything owed, including mortgages, loans and other debts. Tracked over time, net worth is the broadest single measure of household financial position, and projecting it forward is the basis of retirement modelling.
General information only. Not personal financial advice. Definitions summarise general rules and do not cover every eligibility condition or exception. Consult a licensed Australian financial adviser (AFSL holder) before making financial decisions.