The three things you need to know about your super
The three things you need to know about your super
Despite superannuation being a hot topic, it still could be the single most overlooked and misunderstood asset you hold.
In this weekends edition:
This is our short Sunday edition, with today’s article from The Sydney Morning Herald, The Age, WA Today and Brisbane Times. Just a brief one today. I’ll save the letters for the longer mid-week newsletter this week. But please keep ‘em coming. Email me at bec@epicretirement.com.au!
Some great news!
Thanks to your popular demand - our podcast Prime Time is back THIS WEEK! Keep your ears peeled Thursday morning! Get on over and subscribe if you haven’t already, on your favourite podcast platform.
And our Epic Retirement Flagship Course is going to launch! (It looks sensational!) Make sure you’re on the Expression of Interest list here as the numbers in the first release will be limited and there will be great pricing and extra goodies and inclusions for this one, being the first 6 week course-event we’ve held. I can’t wait!
Have a lovely Sunday. Make it epic!
Many thanks! Bec Wilson
Author, podcast host, columnist, retirement educator, and guest speaker
The three things you need to know about your super
Despite superannuation being a hot topic, it still could be the single most overlooked and misunderstood asset you hold.
If you want to have a fulfilling retirement and a fantastic prime time, super is something you need to understand and get proactive about as early in life as you can. And – because making things about retirement and pre-retirement easier to understand is my gig – today we’re going to unpack the stuff you really should know.
1. How to get money into superannuation. It can be tricky to get money into superannuation. But it’s almost always worthwhile doing it.
In the accumulation phase, the most common way we get money into super is through employer contributions. Almost everyone who works in Australia is contributing to their super fund every month at the compulsory rate of 11 per cent. And we pay just 15 per cent tax on these contributions.
Eleven per cent might not seem like much, but it’s a solid amount. The average wage in Australia is now exceeding $95,000, so the average Aussie is contributing over $10,500 per year, many without realising it.
You can add to your 11 per cent, topping up your super with voluntary concessional contributions, of up to $27,500 into superannuation per year, at a cool tax rate of 15 per cent. And, if you don’t use all the cap in a year, you can roll it over for five years.
If you’re not paying attention, I can almost guarantee you won’t be making the most of the opportunities on offer.
The third way to get money into super is through non-concessional contributions, where you can contribute up to $110,000 per year, at your marginal tax rate, up to the $1.9 million cap. And there’s a clever bring forward rule, allowing you to contribute up to $330,000 in one go.
The fourth way is using the downsizer concession. If you are over 55, have owned your home for more than 10 years, and lived in it, you can downsize and slide up to $300,000 to your superannuation, tax-free. Couples can contribute $300,000 per person.
And the fifth is through the small business tax concessions available if you sell an eligible business.
2. How to make your superannuation grow. Once it’s inside your fund, the key is to make your super grow. You’ll be leveraging the remarkable power of compound investing, allowing your money to multiply many times over your lifetime. So, to make sure this happens, you need to be proactive.
The first thing you need to understand is how much risk you’re willing to take. Assess your risk profile, then review your investment mix. When you put money into super, unless you’ve actively changed your settings, it’s invested into a default fund. If you want to redirect the investments to a higher level of risk and growth, or a lower level, you’ll have to contact the fund.
The second is to monitor the performance of your investments. The consistency of your fund’s performance is crucial. The media loves to champion the highest performing super funds putting one year performance up in lights.
The number I prefer to look for is the seven to 10-year returns. Be aware funds will use the prettiest “legally correct” numbers in their marketing. So delve a little deeper than the website. Read between the lines.
And finally, check out the fees. Those sneaky little nibblers can eat away your compound returns. You can benchmark your fees on the ATO’s YourSuper website.
3. How to draw on your superannuation. Finally, the most poorly understood area of super is how to start spending it.
Your superannuation was designed to be the long-term saving bucket you use to fund your retirement, not to become a new type of legacy. So don’t be embarrassed or afraid to use it.
Just be sensible - build a budget, understand your cost of living, and how much you can afford to spend on lifestyle choices and don’t blow the lot on dumb decisions.
There are a couple of ways to get access to your super. The most common step people take is to technically retire, which you can do from preservation age, which sits comfortably at 60 for almost everyone these days. ARTICLE CONTINUES….
Read the rest of this article, on The Age, The Sydney Morning Herald, Brisbane TImes and WA Today.
Now, for a fun and insightful poll…. My article from last weekend certainly hit a nerve! So I can’t wait to hear your thoughts on this one.
