Focus on Superannuation
For many people, superannuation is the single largest financial asset they have, apart from the family home. So it pays to take it seriously.
Decisions you make about super can have a long-lasting impact on your quality of life in the years to come, and could be the difference between a comfortable or a challenging retirement.
How much super do you need?
What kind of lifestyle do you want in retirement – and are you on track to achieve it? These are important questions and the sooner you tackle them, the better off you will be. There’s no magic formula that determines the income you’ll need, because factors like life expectancy, retirement age, income and expectations all play a part.
Building on your employer contributions
If you are working, your employer should already be making regular contributions into your super account of at least 10% (as of July 2021). So will this be enough to give you the retirement you deserve? Not according to the Association of Superannuation Funds of Australia (ASFA). ASFA suggest that you should be saving around 12% – 15% of your salary over a 30-year period as a minimum savings target. And more if you have taken time out of the workforce for any reasons, such as to travel, study or raise a family.
Harnessing the benefit of compound interest
To achieve the recommended ASFA savings, you will probably need to make some additional super contributions. If so, the key is to start early, because the earlier you add funds to your account, the longer it has to grow and work for you.Super grows through investment earnings and the benefit of compound interest, which allows you to earn interest on your interest. Adding as little as $20 a week could boost your super by thousands in the long-run.
Great options for growing your super
So once you’ve decided to give your super a boost, the next question is… how? Fortunately, there are a few different options to consider. Post-Tax Contributions Making voluntary contributions from your after-tax pay is a simple way to top-up. Simply deposit your own money into your super account using whatever payment methods your fund offers.
Government co-contributions
If you are a low or middle-income earner, you may be eligible for a government co-contribution up to a maximum of $500. The amount you receive will depend on your income and the size of your own after-tax contribution. Learn more at www.ato.gov.au
Our top five smarter super tips
1. Take an active interest
Remember, this is your money we’re talking about. So take the time to give your super a health check, and make sure it’s working hard for you.
2. Keep track of your super online
Many super funds provide online access to your balance, investments, insurance and more. Ask your super fund how you can log-on.
3. Consider your investment options
Most super funds provide a choice of investment options, giving you the freedom to choose one that suits your age, lifestyle and risk profile.
4. Consolidate your super
Multiple super funds could mean multiple sets of fees. By consolidating them into one fund, you may find that more of your money will stay invested for your future.
5. Talk to an expert
Super can be confusing, so getting expert help could help you make more informed decisions and plan a more comfortable future.
Salary sacrifice
Salary sacrificing is a personal contribution that is made directly from your pre-tax salary. The payments are arranged through your employer, and can be a tax-efficient way to boost your super, depending on your circumstances.
Age restrictions for personal super contributions
If you are considering making personal super contributions, first check that you comply with the current government regulations about age restrictions. While super rules change regularly, these are the current legislation at November 2016:
Aged under 67 - No restrictions. You can make personal contributions regardless of your work status.
Aged 67 – 74 - Personal contributions can be made if you have worked at least 40 hours over 30 consecutive days during the same financial year you make the contribution.
Aged 75 and over - Personal contributions are not allowed.
Be aware of your contribution caps.
Concessional contributions (which are contributions your employer makes on your behalf, including salary sacrifice contributions, or contributions that you claim a tax deduction for) are capped at $27,500 per annum. Non-concessional contributions (which are ‘after-tax’ personal contributions you don’t claim a tax deduction for) are capped at $110,000 per annum (or $330,000 if using the 3 year bring forward rule).
Have more questions? Reach out to our knowledgeable team today.
General Advice Warning
The information in this presentation contains general advice only, that is, advice which does not take into account your needs, objectives or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial advice that addresses your specific needs and situation before making investment decisions. While every care has been taken in the preparation of this information, Infocus Securities Australia Pty Ltd (Infocus) does not guarantee the accuracy or completeness of the information. Infocus does not guarantee any particular outcome or future performance. Infocus is a registered tax (financial) adviser. Any tax advice in this presentation is incidental to the financial advice in it. Taxation information is based on our interpretation of the relevant laws as at 1 July 2020. You should seek specialist advice from a tax professional to confirm the impact of this advice on your overall tax position. Any case studies included are hypothetical, for illustration purposes only and are not based on actual returns.