Retirement
How the new contribution rules could boost your super
By utilising the new deductible contribution rules and committing to tipping money into super early, plenty of Australians can achieve a balance of $1 million by age 65, says HLB Mann Judd.
How the new contribution rules could boost your super
By utilising the new deductible contribution rules and committing to tipping money into super early, plenty of Australians can achieve a balance of $1 million by age 65, says HLB Mann Judd.
The rule changes to super on 1 July 2017 have made it much easier to make additional contributions to super, says HLB Mann Judd wealth management partner Jonathan Philpot.
One of the pivotal changes has been to deductible contributions to super. Before 1 July 2017, only self-employed people could claim personal super contributions as a tax deduction.
But according to the Australian Taxation Office, "most people under under 75 years old will [now] be able to claim a tax deduction on personal superannuation contributions".
Mr Philpot says that means Australians can use personally deductible contributions to start building their super balances from a much younger age.
"In the past, employees had to elect to salary-sacrifice in order to make additional superannuation contributions and receive the associated tax savings. Now, people earning salary and wages are able to make voluntary contributions to superannuation on their own behalf and claim a tax deduction in their personal tax return," Mr Philpot said.
"In fact, people will need to start consciously building their superannuation in their 40s, and should be trying to contribute as close to the maximum of $25,000 a year as they can, as their main form of long-term savings.
"By making additional deductible contributions through to age 65, people can significantly grow their super balance and potentially get it well above a million dollars," he said.
Mr Philpot gave an example of a 40-year-old with a super balance of $100,000 who commits to making the maximum concessional contribution of $25,000 a year, laid out in the table below.
In contrast, he said, a 50-year-old with the same opening balance would be significantly worse off:
"For most people in their 40s, repaying the home mortgage is — understandably — the main focus. While this should continue to a be a focus, once people have their mortgage under control, it is worth considering using the offset account to make additional concessional contributions to super," Mr Philpot said.
"Relying solely on the superannuation guarantee contribution of 9.5 per cent is unlikely to allow most people to save enough for a comfortable retirement – something that many people still seem to be unaware of."
He added that the new changes to superannuation contributions doesn’t automatically spell the end of salary sacrifice arrangements.
"The changes don’t necessarily mean people should cease their salary sacrifice arrangements, as they have two main benefits.
"Firstly, it is an automated savings option, making it easier for people to chip away at growing their wealth as it can be a struggle to come up with funds at year end to contribute to superannuation.
"Secondly the tax benefit is immediate, as it is pre-tax dollars that are salary sacrificed, whereas when using the personal contribution method people have to wait until lodging their tax return for the tax refund," Mr Philpot said.
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more
Superannuation
Aware Super takes on Australia's gender retirement gap, aiming for financial equality
Aware Super, one of Australia's largest superannuation funds with a 70 per cent female membership, is on a mission to close the gender gap that sees women retire with 30 per cent less super than men ...Read more
Superannuation
Age Pension increase prompts Australians to review their finances
The increase in the Age Pension, which takes effect today, should serve as a prompt for many older Australians to ensure they're maximizing their income as cost-of-living pressures persist, according ...Read more
Superannuation
Retirement reimagined as Australian optimism meets inflation worries in 2023 super fund insights
The latest reports on retirement confidence among Australians present a spectrum of sentiments, with fresh data revealing surprising optimism in some quarters while exposing underlying concerns in ...Read more
Superannuation
Aussie retirees face a shortfall as ideal retirement nest egg doubles what super will deliver
As Australians look towards retirement, the desired superannuation balance that many believe will ensure a comfortable retirement has significantly outpaced what they are on track to actually save. Read more
Superannuation
Super funds eye 6.5% return in 2023, despite a rocky start
As the year draws closer to its climax, Chant West unveils its projection for super funds in what can only be described as a year of economic ebbs and flows. Read more
Superannuation
A deep dive into Australia’s superannuation system
Australia has a robust retirement savings system known as superannuation designed to provide financial security to Australians in their post-work years. Read more
Superannuation
50,000 super fund members impacted by data breach
Around 50,000 member records were impacted by the breach that took place earlier this month. Read more
Superannuation
Two super funds tipped to reach $1tn by 2040
KPMG has released the findings from a new review. Read more