Depending on your age and circumstances, you can use superannuation investing, end-of-year, and retirement planning options. In this post we discussed super tactics by age and those generally applicable for everyone.
Maximize old-age pension
If you’re reaching Pension age, you may want superannuation advice to maximise Age Pension payments or get additional social security benefits, such the Commonwealth Seniors Health Care Card.
If you have a younger spouse, you may explore a withdrawal and recontribution approach — shifting your assessable superannuation funds into their non-assessable super account, which might increase Age Pension payments and benefits.
If you’re married, you can transfer 85% of some super contributions to your spouse. You may use this to equalise account balances, access super early, lower your overall super amount, or keep more of your balance from Centrelink.
The spousal contribution tax benefit is another motivation to contribute to your spouse’s super. The spouse contribution tax offset can save you $540 annually.
Under-40 Super Investing
Under 40s won’t be able to access their super for 20 years. This may encourage you to boost your investing plan.
If you have a long investment period and a respected super fund with broad investment possibilities, you may choose to invest aggressively. An aggressive investment choice is riskier and can cause your balance to fluctuate more than a rodeo cowboy, but over the long-term (10 years+), it may yield larger returns than more cautious options. Those who can handle swings may choose this alternative.
Under-60 Super Investing
If you’re 40 to 60, and you’ve built up a fantastic balance and want to maximise it before retirement. Consider your superannuation investing plan in addition to end-of-year, couple, and general strategies.
Your risk tolerance and proximity to retirement will affect how you invest your super.
Most super funds will invest your super in a Balanced option or an aged-based option if you don’t pick.
If you’re 10 years from retirement and OK with volatility, consider transferring your super balance to a high-growth or aggressive investing choice to boost your retirement funds. If you’re risk-averse and want to preserve your savings, choose a more cautious alternative.
A strong allocation to growth assets like shares and property can give better long-term gains, but also larger volatility in your super balance. A reduced allocation to stocks and property will smooth investment returns but lower long-term returns.
Ensure you know how your super is invested and comprehend diversification, asset allocation, and time horizons.
60+ Great Strategies
If you’re 60 or older, you should focus on your superannuation since it may give big financial rewards. Also consider the following options.
A transition to retirement pension lets you access super while still working. This can be used to decrease debt, augment reduced hours, or adjust to retirement.
A recontribution method converts taxable superannuation components into tax-free components to decrease future death benefits tax and guard against changes to superannuation and tax regulations that might charge persons over 60 on superannuation withdrawals again.
You can convert your superannuation balance into an account-based pension if you’ve completed a full condition of release, such as retirement or age 65.
An account-based pension provides a tax-free income for living costs. Account-based pension investment profits are tax-free, compared to 15% in accumulation period. This can also eliminate supercap gains tax.
Super Strategies for Low-Income and Medium-Income Earners
Low-Income Super Tax Offset (LISTO) can enhance your super balance by up to $500 if you earn less than $37,000 by receiving contributions and filing your tax return.
Low-medium income earners may also be eligible for the government co-contribution of up to $500 by donating $1,000 to super as a non-concessional payment, providing they earn less than $57,016.
High-income earners have a 47% tax rate. All personal investment earnings will be taxed at 47%. Regardless of your high income, all superannuation investment earnings are taxed at 15%.
If you have excess funds or surplus income you won’t need until retirement, consider making voluntary super payments. Concessional contributions can enhance your super wealth and lower your personal income tax, whereas non-concessional contributions enable you to contribute up to $330,000 but don’t cut your tax.
Investing within super rather than outside super can increase your retirement fortune. Each year, you can make concessional and non-concessional super contributions.
The Strategies for Everyone
One of the best superannuation advice given to people regardless of age, marital status, job status, or income, to consolidate their super, is to use the carry-forward contribution rule, or get expert financial advisor.
Super Fund Accounts Combination
As a superannuation advisor in Australia, we do advice clients to consider combining several superannuation accounts into one. Benefits include decreased costs, easier super management, and a more concentrated investing plan.
Rolling over your Super Funds.
Roll-forward super contributions let you carry over unused concessional contribution cap into subsequent years. From 2018/19, you can carry forwards unused donations for up to five years.
To use carry-forward contributions, you must have had a super balance below $500,000 on 30 June of the preceding financial year and be eligible for concessional contributions. Carry-forward concessional contributions can boost your superannuation savings and lower your income tax.
The superannuation bring-forward rule permits you to contribute up to $330,000 over three financial years without being limited by the yearly $110,000 limitation.
This is handy if you just received an inheritance or sold a substantial asset, such as an investment property, and want to contribute to superannuation. The bring-forward rule is activated when non-concessional contributions exceed $110,000.
Personal financial advisor or superannuation advisor may be invaluable when managing your superannuation and retirement plan. You labour your whole life to build up your fortune in expectation of living a pleasant life in retirement. And you shouldn’t mess up.
Every financial expert’s at Omura Wealth Advisers understand superannuation rules, tax legislation, investment techniques, and retirement plans that may place you in a better financial position.