Australia’s superannuation system is one of the largest and most efficient retirement schemes globally, so naturally will form an important part of the financial plans of many Australians, as well as those overseas looking to call Australia home in retirement. It’s also one of the most tax-efficient retirement schemes globally, so whether you’re an Australian expat living and working abroad, or you’re living and working in Australia, it’s important to not overlook the value of your superannuation.
This week our team at Ally Wealth Management is exploring the basics of super for everyday Australians, and what you need to consider when it comes to planning for your retirement.
Let’s start with what superannuation is
Superannuation is the money that you save while you’re working to prepare you for your retirement. Introduced as a compulsory measure in Australia in 1992 to ensure that people are financially prepared for their golden years, superannuation is one of the most tax-efficient vehicles for Australians to save and invest in for their future.
Under the employment rules in Australia, your employer will contribute 9.5% of your salary to your chosen superannuation fund, which is known as the Superannuation Guarantee (SG). Australia’s superannuation system is one of the most highly regarded pension systems globally, but many Australians are not paying attention to how their funds are invested and the role that their superannuation will play in achieving their financial goals.
Let’s explore how you can contribute to your super
Superannuation contributions typically fall into one of two categories, depending on how contributions are made to your fund. These are as follows:
- Concessional Contributions: This is made with your pre-tax dollars for Australians, and is what most employer contributions will fall under. The annual cap for concessional contributions is currently $25,000 per annum.
- Non-Concessional Contributions: This is made with your after-tax dollars for Australians. The annual contribution cap for this type is $100,000 per annum.
Next, consider if you should add extra money to your super
While there is no one-size-fits-all approach to contributing to your superannuation fund, for many Australians planning for their retirement, boosting your super contributions is often a sensible approach. It’s important to work with your financial planner to explore what makes the most sense for your situation and the types of contributions that you should be considering to achieve your financial goals.
Consider how your superannuation is invested
The development of the superannuation industry over many years has ensured that individual Australians have a plethora of choices when it comes to investing their superannuation. This could be via a wrap platform, industry super fund, self-managed superannuation fund or even a small APRA fund depending on your own circumstances. Within your superannuation, you can ensure that your investments are aligned to your risk profile and investment objectives, which an experienced financial planner can assist you with.
Finally, plan when you can start to access your superannuation
In most circumstances you can gain access to your superannuation funds under two scenarios:
- Preservation Age: Once you’ve retired and reached your preservation age, which is further explained below.
- Transition to Retirement: Through a transition to retirement strategy once you have reached your preservation age
For the majority of Australians accessing their superannuation, this will be carried out when they reach their Preservation Age. This age is based on your Date of Birth and is detailed in the table below:
Who should you speak to about your super
As always, it’s important to seek the guidance and advice of an experienced Australian financial planner who can explore your options for your superannuation and ensure that it’s aligned with your financial goals and objectives. If you’d like to ensure that you’re making the most of your superannuation, or just have some questions that you’re not quite sure about, reach out to our team at Ally Wealth Management and book a complimentary discussion.
Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.
Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.
Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.
General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.