superannuation

The word ‘super’ is a pretty cool word. Superstar, superman, super-size. But what about superannuation? Boring, right? Well, as dull as the word, and the overall concept, might seem – it’s time we found something cool about superannuation. It isn’t exactly the first thing you think of as a young, spontaneous twenty-something year old. Because let’s face it, at that age you rarely think about the following week, let alone retirement. As drab as it might be, think of it as a magic little money box where everything you put in is kept aside for you for a party sometime in the future. When you retire, you don’t want to be worrying about money; you’ve spent your entire life working hard, now it’s time for you to sit back on the porch in your rocking chair, and enjoy a nice game of cards. Let us tell you a bit more about the benefits of superannuation…

What’s so good about superannuation?

Having your super locked away until you reach retirement ensures your savings will be used for one purpose only – to help you achieve your financial goals and secure the retirement you’re looking forward to. Imagine how sad it would be to reach retirement without a superannuation fund waiting for you, only to discover you’ve saved nothing to live off for the next twenty years? That is why superannuation is so important. As it’s unlikely that the government Age Pension alone will give you the financial independence you deserve for the 20 plus years you’re likely to spend in retirement, superannuation is key.

How to maximise your superannuation

– Superannuation is one of the most tax effective ways to save for your future. Your contributions are taxed at up to 15% which is much lower than most of the marginal tax rates. If you contribute part of your pre-tax income to super (salary sacrifice) you will be taxed at 15% rather than your marginal tax rate, which may be as high as 45%. Why not take a look at My Credit Union’s salary sacrifice calculator, which gives you an idea of how salary sacrificing could help boost your super.

– Receive a super co-contribution from the Government! Do you earn less than $46,920? Because 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 $31,920 per annum and phases out completely at $46,920 per annum. But what an easy way to get some extra bang for your buck!

– If you have a few different superannuation funds, maybe from changing jobs, and thus superannuation companies, then it helps to get all your savings in the one place. Consolidating your multiple accounts could save you money in fees and charges, which are just wasted when your money is scattered all over the place.

superannuation- When you’re considering investing superannuation, it’s important to ensure your super is invested in line with your personal circumstances and objectives. Superannuation is a long term investment and in times of downturn, it’s vital for you to remember the fundamentals of investing; share markets work in cycles, and value will eventually be restored. History has shown that shares have the potential to outperform all other asset classes over the long term. Consider an investment consultancy if you want to know more about the insider tricks of the trade.

– Self-managed superannuation funds (SMSF), also known as a DIY fund, is a super fund with four or less members, where each member of the fund is a trustee or the director of a corporate trustee. Each trustee therefore controls the investment of their contributions and the payment of their benefits. In recent years the government has changed the laws to allow superannuation funds to borrow in order to invest in property, and this is possible with an SMSF. For advice on SMSF Property Investment in Perth, it’s worth finding out how using your super to invest in property can help you maximise your superannuation funds and set yourself up for retirement. Momentum Wealth are the people with all the answers, so you wont get lost in amongst all the superannuation jargon!

Is superannuation still uncool?

Let’s face it, as boring and unexciting as superannuation is, it’s an important part of our lives we need to care about for the sake of our futures. Saving money is no-one’s idea of a good time, but once you hit retirement, and find a nice golden nest egg that’s been growing for years, you’ll thank your younger self profusely. So maximise your future in all the right ways, pay attention to where your super is hiding, and start gearing up for old age on the front porch.

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