AU (Super) vs US (401K) vs SNG (CPF) Retirement
I’ve assessed the AU / US / SNG Retirement Employee and Employer Contributions and the results are very interesting.
I’ve worked in the US for about 10 years, and lived in Australia for about 6 years, so I’m definitely familiar with both of these countries. SNG (Singapore) I haven’t worked or lived there yet, but based on my research on how CPF works, I’ve used my best estimates.
It’s possible that things may have changed after I relocated out of the US since 2013, but understanding how the 401K contribution limits work, employer contributions and such, I’ve only updated the limits. Assuming that the US employers contribute a fixed 5K amount, as opposed to 6% for the highly compensated employees, we’ll use 5K as default. I’ve also used an estimate of 100K for the US Salary.
For Singapore, employee contributions are about 20%, and employer contributions are 17%, only estimate I used was the median Singapore salary, so I’ve ballparked at 5500 SGD monthly x 12 = 66K.
For AU, I’ve used Kathy’s actual salary of 175K, and actual bonus of 45K. Yes, her compensation is that much. Her job is to make income, my job is to accumulate our wealth through investing.
The results are interesting and astounding. Based on my assessment, US employer contributions are way below compared both AU and SNG. US employees must contribute a lot more, and yet, their employer contributions are subpar than AU (Super Guarantee contributions) and SNG (CPF contributions). Even if the 401K contributions are pre-tax, the US employees are missing a lot of free money from their employer contributions.
AU super contributions are taxed fixed at 15%. Kathy’s AU marginal tax rate is about 30%. Even if her contributions are taxed at 15%, her net employer contributions still makes up about 20K AUD of free money annually. US, assuming at 5K USD, isn’t even a close comparison.
If we compare AU and SNG, AU makes up almost double of SNG of free money. If you compare AU and SNG salaries, it’s almost triple. Yes, SNG tax rate is much lower at about 10%, but looking at it net salary wise, makes 3x more in salary would still give you much more in purchasing power. 175K AUD x 70% = 122K AUD vs 66K SGD x 90% = 60K SGD. This is salary only, excluding Bonus. If you include employer contributions, AU nets 2x more than SNG.
