Simple Certainty | Superannuation is the Foundation of the Retirement You Want
Most of us hold ambitions for our retirement that extend beyond comfort and security. In this edition of Simple Certainty, we look at the key to seeing them realised.
What ambitions do you hold for your retirement? More importantly, how do you plan to see them realised?
In this edition of Simple Certainty, we continue to take a deep dive into the core components of a sound financial plan. Today, we’re looking at the big one – superannuation.
A healthy superannuation is a healthy future
We all have plans for our retirement. We all have ambitions and goals we want to achieve in our post-work years, whether that’s travel, spending more time with family, devoting more time to a hobby – or all of these and more.
In order to see these goals realised, we need to have financial freedom and independence. This is what superannuation is all about. It’s the income that flows when the work stops. It’s the revenue stream that allows us to maintain the lifestyle we want when our careers come to an end. A healthy and balanced superannuation gives us certainty around what our future looks like.
What is superannuation?
10% – or thereabouts – of your income directed into a tax-friendly haven for future use. Sounds pretty simple, doesn’t it? The reality is, however, that superannuation is one of the most complex topics in the financial world. There are a lot of potential benefits when it comes to superannuation, but it requires a deep understanding to make sure you’re taking advantage of what’s on offer.
Here are some key considerations around super.
- What type of fund is best for you? Managed or self-managed? Self-managed means you have control and can make all the decisions around investments, but you’re also responsible for complying with ever-evolving and complex tax laws. As they say, with great power comes great responsibility. If that’s not for you, then managed funds are the other option. But which type – retail, platform or industry?
- Contributions are another hugely important consideration. Basically, we want to get as much money as we can into super because it’s an incredible tax-friendly haven. Contributions allow us to do this, but there are limits as to how much and when you can contribute, as well as many types to consider: tax-deductible, salary-sacrifice, personal and co-contributions, and downsizer for those aged over 65. Knowing the most tax-effective method for contributing to your super is vital if you’re to take advantage of what’s on offer.
- Also consider when you can access your super and what the tax implications are.
- And, if you’re self-employed, don’t fall into the trap of neglecting your superannuation. When you work for someone else, the super guarantee means we don’t have to worry about the 10% contribution – it’s done for us. But those who work for themselves need to take the disciplined approach.
Superannuation is an investment vehicle
It’s important that you don’t think of superannuation as an investment in itself. Rather, super is an investment vehicle, which can be used to purchase assets with your contributions. When structured correctly and used effectively, superannuation can be a fantastic foundation for investing, asset protection, tax and estate planning aspirations.
But, most of all, a healthy and balanced superannuation is the best foundation for the retirement you’ve always dreamed of. When done right, it provides the certainty and reassurance we all need for a good night’s sleep.
That’s it for this edition of Simple Certainty. Make sure to call us on (03) 9835 3800 to book your personal appointment.
Disclaimer
Please note this is general information only and you should always seek your own personal
advice.