Superannuation is arguably the most tax-effective method of saving for your retirement. For many of us, it is the largest asset we have, apart from our homes.
With a variety of contribution options, superannuation can be a complex area for the uninformed.
It's important to form a strategy to make the most of the tax concessions, financial incentives and rebates. This will help to ensure your superannuation savings provide a comfortable standard of living in retirement.
By forming a strategy, you may take advantage of:
- Transition to Retirement (TTR) rules
- Choice of superannuation
- Self managed superannuation funds (SMSF)
- Salary packaging (also known as salary sacrifice)
- Retirement income streams
How to make contributions
- Employer Super Guarantee Contributions – 10.5%
- Employee – Salary sacrifice contributions
Salary forfeited as contributions to super instead of taking as taxable income. From 1 July 2017 employees will also be able to make personal deductible contributions.
- Employee – Voluntary contributions (after tax)
Could be eligible for Government co-contribution payments if other conditions are met.
- Self employed – deductible contributions or non-deductible contributions
- Not working and under 65 – (non-deductible)
Ability to make deductible contributions will depend on taxable income.
- Spouse – spouse splitting of spouse contributions, or contributions on behalf of a spouse.
You can view the new superannuation thresholds for 2022/23 here.
How to enjoy your income in retirement
Your decision about where and how your money is invested in superannuation could increase your income in a number of ways.
By rolling your superannuation money into a pension income stream at or after retirement, you can:
- generate more tax-effective income
- receive more generous Centrelink treatment
- have the flexibility to decide how your assets will be left to your beneficiaries.
Account-based pensions are the most common form of superannuation pension. They are specifically derived from superannuation money.
The pension income is paid from the balance of the money remaining in the your superannuation fund each year until it runs out. Payments can commence following full retirement after preservation age, or if you are permanently unable to work due to invalidity, or at age 65 regardless of whether retired or not at that time.
An account-based pension can offer a range of flexible investment options. You can position your investments so they are more effective in meeting income and growth needs in retirement.
This flexibility means control is ultimately retained by you over the level of investment risk and return within the fund.
How can we help?
To discuss you superannuation strategy in detail, speak with a Morgans adviser in your nearest Morgans branch.
With a dedicated technical research team, and regular development opportunities, Morgans advisers are kept up to date with legislation changes, the latest strategies, and ways to make the most of your superannuation.
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