Superannuation can be an unfamiliar, intimidating or even frightening concept for a lot of people.
You have probably heard of it, may know that you have it, but may have very little understanding of what superannuation actually is and what options you have. What is contrary to popular belief, superannuation is not an “investment” – rather, superannuation is a tax-concessional structure which you hold investments within. Underneath all the complexity, that’s all superannuation truly is – a house where you can store and grow your retirement capital.
Superannuation is an attractive vehicle when considering where to house your retirement capital due to the tax concessions offered by the structure. However, there are trade-offs for the benefits offered by superannuation - rules dictating when you can access your retirement capital, how much you can hold in the tax-free “pension phase”, and how much you can contribute each year (including tax-deductible and non-tax-deductible contributions) are all key things you need to be aware of when seeking to maximise your retirement resources.
Once your Superannuation is in “pension phase”, the investment earnings generated within this phase will be - in most cases - completely tax free, while also providing you with a tax-free income stream to support your retirement needs. Superannuation is a very beneficial environment to house your retirement savings for this reason most of all – tax free earnings and tax free payments.
How your superannuation is invested is completely up to you. There are many different superannuation funds in the marketplace, and they all offer differing levels of control, transparency, flexibility, and cost. You may have heard of Industry funds, Retail funds, or even Self-Managed Super Funds, which are all options that you can consider. However, unless you are able to clearly identify your objectives for your retirement savings, it will be hard to determine whether the super fund & underlying investments you hold are properly suited to your individual situation.
As Financial Planners, we consider a range of different structures, where superannuation is just one. However, superannuation is hard to look past when planning where to house retirement capital to fund a tax-free income in retirement.
At Morgans Port Macquarie, we aim to help you cut through the complexity surrounding Australia’s superannuation system, with the goal of assisting you in establishing a detailed, personalised retirement plan that gets the most out of your investments and allows you to lead the lifestyle you dream of in retirement.
If you are interested to learn about how we can assist you, our experienced team is always available and happy to answer any questions you may have.
Porsha Papas B.Com
Authorised Financial Planner 001270130
Morgans Port Macquarie
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