Make the most of your retirement benefits

Written by Ronald Pratap

on October 23, 2016
Posted In

Plan now and get ahead

Boosting your super is always a good strategy, and as we get closer to the end of the year it is a good time to start thinking about how you want your financial future to look.

 

Super is often the biggest source of retirement savings. There are some great strategies you can put in place today to build a brighter financial future.

It’s a great time to put spare cash to work in your super fund. That’s because your super is taxed at concessional (or lower) rates, leaving you more to play with when you retire.

Here are five simple strategies to boost your super:

Salary sacrifice

Salary sacrifice is a great way to increase your retirement savings.

Salary sacrifice, if offered by your employer, involves putting some of your tax-deductible income into super, before you have a chance to miss it. Salary sacrifice contributions are taxed at the concessional rate of 15 per cent or 30 per cent if your adjusted taxable income is $300,000 or more, rather than your marginal rate.

Just make sure you stay within your contribution limits. Concessional contributions are capped at $30,000, or $35,000 if you are aged 50 or over at the end of the financial year. This includes Super Guarantee payments already being paid by your employer as well as any salary sacrifice contributions.

And the savings don’t stop there. Once your money is in super, investment earnings are also taxed at 15 per cent. If you held the same investments outside super they are taxed at your marginal rate, which could be as much as 49 per cent!

There are some great strategies you can put in place today to build a brighter financial future.

Make a tax-deductible contribution

If salary sacrifice isn’t an option, you haven’t been forgotten.

If you are self-employed, retired, not in the paid workforce or a certain employee* and are eligible to contribute to super, you may be entitled to make a personal super contribution and claim it as a tax deduction. The amount you claim as a tax deduction will generally be taxed at 15 per cent, which may be less than your marginal tax rate.

Protect your family

Do you ever wonder how your family would cope financially if you were to get seriously ill, pass away or become disabled?

One pre-emptive step could be to take out life insurance through your super. This involves making premium payments from your super contributions or account balance, rather than your after-tax income.

The upshot is that you’re left with more money in your pocket, but still have peace of mind knowing that your family may be covered in case of the unexpected. Another advantage is that your premiums may be lower because your super fund can offer a group discount.

The downside is that your super account balance is smaller. For this and other reasons why this strategy won’t suit everyone, consider seeking professional financial advice about your insurance needs.

Give your spouse a super lift

If your better half earns a low income or has taken time out of the workforce to care for children, you can top up their retirement savings by contributing to their super.

As an added incentive, you may receive a tax offset of up to $540.

You may also be able to split your employer’s super contributions or your own personal tax-deductible contributions with your spouse. If your partner is older than you, they will be able to access their super before you can. This can give both of you more financial flexibility in the years leading up to retirement.

*An employee whose combined assessable income, reportable fringe benefits and reportable employer super contributions from employment is less than 10% of their total assessable income, reportable fringe benefits and reportable employer super contributions.

If you earn less than $51,021 for the 2016-17 financial year and make an after-tax contribution to super, then you may be entitled to a government co-contribution of up to $500.

Call now if you would like to discuss these strategies in more detail on 0434 502 079 or email ronald.pratap@rpwealthmanagement.com.au

This information is of a general nature and has been prepared without taking account your objectives, financial situation or needs. You should consider the appropriateness of the information, having regard to your objectives, financial situation and needs.

This information is current as at October 2016 but may be subject to change.

Taxation law is complex and this information provided is general in nature only and does not constitute tax advice. We recommend that you seek independent advice from a tax adviser or registered tax agent specific to your individual circumstances.

This information was collected via http://www.onepath.investorinsights.anz.com/get-sorted/plan-now-and-get-ahead

Ronald Pratap

Principal Financial Planner at RP Wealth Management | Financial Planning l SMSF I Insurance l Property Advisory. Our purpose is to provide our clients with sound advice and direction to assist with their financial affairs and help them make the best choices in achieving what is important to them.

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