When it comes to creating a better, more secure future you may have lots of options. Often the most effective way to take control of tomorrow is to simply increase the amount you contribute to super.
The federal government offer great incentives: the co-contribution scheme, personal deductible contributions, spouse contributions and salary sacrificing, all of which can make a big difference to your super balance over time. With more income in retirement, you’ll have more choices and the chance to do all the different things you hope to do.
Just starting out
When you first start in the workforce, it’s easy to dismiss super as money you can’t access or ‘lost’ money. It’s out of sight, out of mind. After all, retirement is a lifetime away. And you probably have more pressing concerns, like saving for your Euro trip, paying off uni fees and organising the weekend get-together.
But fast forward a few years and the picture can be quite different. For many people, super becomes their primary retirement savings vehicle, thanks to the regular superannuation guarantee (SG) payments their employer makes.
Since being introduced in 1992, SG payments have gradually become a part of our working lives. The 9% SG payments are set to increase to 12% over the next seven years to help Australia’s ageing population save more for their retirement.
A view to retirement
But despite the SG increase, Australians are becoming less prepared for retirement. Many Australians are cautious of putting extra money into super since the global financial crisis began in 2007.
But you don’t have to spin the roulette wheel. There are plenty of less risky ways to invest your money in super, including term deposits.
And super remains a tax-effective way of saving for retirement.
Super is tax-effective
One of the great things about super is that your money is taxed differently to your other investments. It has been designed to reward you for long term investing and you generally pay less tax on the money that goes in, and on the earnings your money makes. This makes super a tax-effective way to save for the future.
Salary sacrifice may be a tax-effective way of increasing your super balance. This is where your employer directs a portion of your before-tax salary into your super account. These additional contributions are taxed at a maximum of 15%, which may be a lot lower than your marginal income tax rate which can be as high as 46.5%. Just be aware that there are caps to the level of contributions you can make tax-effectively. And when you withdraw super money after age 60, the withdrawal is tax free, provided you are in a taxed super fund.
If this all seems too confusing, don’t worry, the team at Bayside Financial Group can help you to:-
- Locate any lost super you might have
- Maximise your superannuation balance
- Pay less tax, through effective planning
- Consolidate multiple superannuation accounts into one easy to manage solution
- Understand your investment options and choose the right mix for your specific situation
- Discuss the different types of contributions available, maximising any benefits available to you
- Review any insurance opportunities including paying for insurance through your superannuation fund
To arrange a complimentary review of your superannuation simply call us on 9583 3400 or visit our contact us page, complete the enquiry form and we will call you.