You may already recognise the term superannuation or “super” as it is the most common form of retirement income in Australia. A super fund is a savings plan in which contributions are deposited into during your working life. When you reach preservation age (set by the Australian Taxation Office), the money may then be accessed. Since most of your retirement income will likely come from super, it is important to ensure that your super benefit is going to meet your financial goals when you retire. No matter what kind of super you have, Vogue Planners will assist you in determining if you are on the right savings path for retirement. Our experienced team of professionals understand that everyone’s retirement needs and financial goals are different. We will give you superior customer service, while creating a solution that fits your situation.
When money is placed into your super fund, it is invested in units of the investments that you choose. The type of investments that a person can have in their super fund can range from property, fixed interest, cash and shares. Since the performance of investments fluctuate with the market, it is important to carefully consider the investment options you select.
If you are employed by a company, that company is required to put a certain percentage of your salary into a super fund. Even though the super is through your employer, you will still more than likely have a wide variety of investment options to choose from.
At the present time, employers are required to contribute 9.25% of your gross salary into your super. Over the next 6 years, this percentage will gradually increase to 12% by the year 2020. During the 2014-2015 tax year, it will increase to 9.5% and then half of percent each year until the maximum of 12% is reached.
While it is required for employers to contribute to their employee’s super fund (when certain conditions are met), individuals also have the option of having additional funds deducted from their salary and contributed into their super. By doing this, you are able to save more money for retirement and you may also be able to reduce your tax liability, as the contributions you make into your super may be taxed at a different rate from your ordinary income.
All employers are required to contribute the required percentage into a super fund for you if you are above the age of 18, make more than $450 per month and work more than 30 hours per week.
One of the most common questions about super is when can members access the funds? In general, a person has to reach their preservation age in order to access their super benefit. The preservation age depends on the year that a person was born and ranges from ages 55 to 60. For example, a person born between 1 July 1963 and 30 June 1964 reach their preservation age at 59, but this increases to 60 for those born after 1960.
Other than reaching preservation age, there are several circumstances which would permit you to access your super. A special condition of financial hardship may provide eligibility, however these types of situations are rare and have specific regulations governing them.
Superannuation and Self-Employment
If you are self-employed in Australia, you are not required to establish a super fund or contribute to super. However, keep in mind that saving for retirement is important and super may be a good option depending on your specific circumstances. The professionals at Vogue Planners can assist self-employed individuals determine the best options for them in meeting retirement goals.
Types of Superannuation Funds
There are several different types of super funds that may be available to you, including:
- Funds established by a company for the benefit of their employees (employer-sponsored funds)
- Self-managed super funds
- Personal funds (retail funds)
- Specific industry funds
Vogue Planners can explain in detail specific types of super funds with you. By knowing all of the options that may be available to you, you will have a clearer picture of how you can save for your retirement and the best path to take.
How Much Will You Need for Retirement?
This answer is going to differ based on your individual circumstances. How much you will have depends on:
- How much you currently have accumulated.
- The number of years you intend to keep working.
As you contribute money into your super, it is easy to simply not think about how much you require for retirement. Even though you may be contributing to your super, it is always important to reassess your retirement goals on a regular basis to make sure that your current contributions are going to allow you to meet those goals. Also, as your financial situation changes over the years, you may find that you are able to save more or less for retirement than you were in previous years.
Financial Advisement for Your Super
Your super benefit is invested, which means that it is important to understand what you are investing in. Not all investments are suitable for you and the stability of where your money is going can change frequently. At Vogue Planners, we can assist you with making good investment choices, while also making your financial goals our number one priority. Contact us today for more information.