It’s never too early to think about your future, and Approved Financial Planners helps you do just that. One of the most important factors in your future is your superannuation fund, or “super.” Learning how to maximise it now will have a profound effect on your future lifestyle.
What Is Your Super Fund?
Your super fund is your own personal retirement fund. Your employer makes contributions to it and you are allowed to make contributions to it as well. In addition, the Government sometimes contributes to your super in special cases. Your employer is currently required by law to pay the “Super Guarantee” of 9.25% into your super. By 2019, this will have increased to 12%.
Your super will grow from year to year from accumulation. In addition, it will also grow from being invested. The laws have changed and allow individual Australians to manage and invest their own super funds. One important benefit is that super income is taxed at a lower rate than other investment income. In addition, those who contribute extra to their supers can receive co-contribution funds from the Government.
Another benefit is that you can purchase income protection or disability insurance at a lower rate through your super.
How Contributions Work
Remember that your employer contributes 9.25% over and above your earnings into your super account. For example, if you make $100,000, your employer must contribute $9,250 into your account. You have the option of contributing more by having your employer deduct money from your pay and contributing it, which can result in you paying less tax. You can also transfer other funds, such as the proceeds from an investment portfolio.
How the Money is Invested
First, you choose which super fund your money goes into. Then, the super fund invests your money for you. You can also choose a self-managed super fund (SMSF).
When You Retire
When you finally retire, you can collect your super fund in three different ways. You can take it as a lump sum, take monthly payments or do a combination of both. If you decide to take monthly retirement payments, the money that remains in the account could keep making money for you because it is still being invested.
Call Approved Financial Planners for more information: (08) 6462 0888.