Superannuation

Superannuation is important because it may be your only means of financial support in retirement.

Wouldn’t you like to enjoy your future without having to worry about money? Unfortunately most people have a huge shortfall in their retirement savings: the average Australian’s superannuation balance at retirement is $292,500 for men and $138,150 for women*, not much considering a comfortable retirement can cost up to $42,962# pa for a single person and $58,915# pa for a couple.

Your employer’s compulsory 9.5% Superannuation Guarantee (SG) contributions are unlikely to give you a comfortable retirement.
But if you start contributing to your super now you can make more of your retirement later.

* ASFA Research and Resource Centre – December 2015
# ASFA Retirement Standard – September 2015

Super tax advantages

Superannuation is one of the most tax-effective ways to save for your future. Your contributions are taxed at up to 15% (up to 30% if you’re a very high income earner), which is much lower than most marginal tax rates. There are also further tax concessions on the fund earnings, and if your super is taken as a lump sum or converted to a retirement income stream.

Because of the concessional tax treatment enjoyed by super, there are limits on how much you can contribute each year and the rules can be complicated. It’s important to seek the right advice to ensure that you’re making the most of your allowable limits. And don’t leave it too late to start contributing, as contribution limits mean that you can no longer play ‘catch up’ when you get close to retiring.

Receive a super co-contribution from the Government

Do you earn less than $51,021? If so, you may be eligible to receive a co-contribution from the Government. For every dollar you contribute to super, the Government will match it with a co-contribution of $0.50, up to a maximum of $500. The co-contribution reduces by 3.33 cents for every dollar of income over $36,021 pa and phases out completely at $51,021 pa.

Your super, your choice

It is beneficial to understand where and how your super is invested because you do have a choice.

Eligible employees can choose the super fund to which their employer’s compulsory SG contributions are made. With ‘choice of fund’, you may no longer need to change funds when you change employers.

Access your super while you are still working

As long as you have reached your ‘preservation age’, a transition to retirement pension allows you to access your super while you are still working and can be used in one of two ways: either to give your super one last blast before you retire or to help you ease into retirement sooner. For more information on transitioning to retirement view the ‘Transition to retirement’ online video.

Contribute on behalf of your spouse

If you have a non working or low income earning spouse, you could contribute to super on their behalf and receive a generous tax rebate.

Getting the right advice

Superannuation is complicated and it’s important that you see a financial planner who can help you identify appropriate super strategies and take control of your investments. Visit the Bridges website to find out more about the vast range of services available; visit a branch of The Capricornian or call 1300 314 900.