It’s important to start saving as early as possible to give your money the longest possible time to grow. Luckily, superannuation is a retirement savings scheme that is unique to Australia and does just that.
Essentially, it is a long-term and tax-effective investment vehicle that is designed to provide Australians with an income in retirement. However, it can also be quite a complex investment product that’s comprised of a variety of factors.
As such, up-to-date advice should be sought from a financial adviser before making any decisions about your superannuation. Here are some key points to explore and understand when it comes to your superannuation:
1) Superannuation Contributions
There are two types of superannuation contributions that you can make. First, the concessional contributions, which are made from your pre-tax income, which means they’re taxed at a lower rate in comparison to the marginal tax rate. This includes employer contributions, salary sacrifice arrangements and personal deductible contributions.
Secondly, the non-concessional contributions are made from your post-tax income and aren’t taxed again. These include personal non-deductible contributions and government co-contributions. These are more manual and voluntary, so coordinate with your financial advisor to know if you’d benefit from this kind of contribution.
2) Superannuation Investments
There are a few other things to think about when it comes to your superannuation investments. First, you need to decide what asset classes you want to invest in. This could include cash, fixed interest, property or shares. Each has different risk and return profiles, so it’s important to understand the difference before making a decision.
Your financial advisor can help you to choose the right investment mix for your needs. Their personal recommendation should be based on factors such as your age, investment goals and risk tolerance.
3) Super Access Upon Retirement
If you’re thinking about accessing your super early, there are a few things to consider. Firstly, you may incur a significant tax penalty. This is because super is generally only accessible after you reach preservation age in Australia. Secondly, it’s important to understand that taking money out of your super could reduce your retirement income.
But if you do access your superannuation upon retirement, you need to decide how you want to access your super. This could include drawing down an income stream, using a lump sum to purchase an annuity or taking a lump sum as cash.
4) Super Beneficiaries Upon Death
When you pass away, your superannuation benefits may be paid to your beneficiaries. Your beneficiaries can be anyone you nominate, including your spouse, children or other family members.
Your superannuation fund will pay out your benefits according to the instructions you have provided. If you haven’t provided any instructions, your superannuation fund will pay out your benefits according to the rules of the fund.
Conclusion
To sum it up, it’s quite important to understand a few key points about superannuation in Australia. It is a long-term savings option that you can make the most of, ensuring that you are on track to a comfortable retirement.
Need some superannuation advice in Australia on the Gold Coast? New Wave Financial Planning is a financial advisory firm embracing the best technologies to tailor the advice process to each and every client. Get in touch with us today!
