4 Tips To Make the Most of Your Superannuation

With so much misinformation and myths about superannuation, it’s easy for people to get confused or wonder; what exactly is superannuation all about? If you are one of them, know that superannuation is simply a way of saving for your retirement. 

You are probably aware that your employer pays you superannuation. Australian employers have to pay a percentage of your earnings into your super account, which is then invested on your behalf by your super fund until you retire.

Or you might be someone who would like to manage your own super – meaning you choose the investments and insurance. This is called a self-managed super fund (or SMSF). It may seem appealing to have control over your own super however, it’s important to know that it comes with a lot of work and it comes with risk. 

No matter what your superannuation fund looks like, it’s important to keep growing your balance and in turn, your retirement fund. 

Here are 4 tips that may be helpful for you in making the most of your superannuation:

1. Contributing to Your Super

Most people’s super is made up of their employer contributions. This is called the super guarantee and is currently a minimum payment of 10% of your salary. 

Unfortunately, for many Australians this isn’t enough means to live off during retirement. Some people choose to make additional voluntary contributions as a way to boost their super. Plus, there are potential tax benefits to this strategy as well. 

You, too, can contribute to the superannuation fund, of up to $27,500 pre-tax. This cap is for concessional contributions which includes the compulsory aforementioned contributions made by your employer and other contributions, such as a salary sacrifice. 

You may also wish to choose making personal contributions to your superfund, which are considered non-concessional contributions and are capped at $110,000 per year. However you would like to contribute to your super is completely up to you, and will generally depend on your personal financial goals.

2. Changing Your Super Investment Strategy

All the money in your superannuation account will be invested in different assets and asset classes based on the portfolio you are working with.

Most funds will allow you to choose from a range of investment options, from conservative to growth. This means you are given a choice between generalised portfolios that are crafted for people with different risk appetites or the choice to pick a portfolio of your own.

Your portfolio impacts the investment you will make, and the returns you receive, so taking the time to research or work with a professional to understand which one is right for you is vital.

3. Accessing Superannuation

When accessing your superannuation, you can only do so when you reach the “preservation age,” which is between 55 and 60 years of age. Also, you will have to be permanently retired to access the funds. 

If you want to continue working at the preservation age, you can opt for a “transition to retirement” strategy, which allows you to access 10% of the fund’s balance while working.

Now, to access the money, you have three ways of doing this. 

  1. A pension income stream (regular weekly or monthly income) 
  2. A lump-sum (full amount)
  3. A mix of a lump-sum and pension income stream

How you go about it will depend, once again, on your needs, so it’s worth seeking professional financial advice on this. 

4. Make the Most of Catch-up Concessional Contributions

If you haven’t used all of your concessional cap in an earlier year, you may be able to catch-up the following year and double your concessional amount. The current catch-up concessional contribution rules allow you to make extra concessional contributions – above the general concessional contributions cap – without having to pay extra tax. 

This provides you with greater flexibility to make concessional contributions, creating an added benefit if you’re someone who has had broken work patterns in previous years or if you didn’t contribute to your super in a particular year. 

Superannuation is a way for you to save for retirement, and so starting as early as possible can help you save up plenty of cash to ensure by the time you retire, you have enough money to live comfortably. 

If you are interested in ensuring your superannuation funds are done properly and in the right way to meet your future financial goals, we highly recommend reaching out to a financial adviser. They can give you a professional insight into your situation, helping you get the answers needed to get your finances under control and gain clarity around your financial goals. 

Poole Advisory is a boutique advisory firm offering a wide variety of financial planning services in Bowral. 

If you need superannuation advice or financial advice for retirement to ensure your financial goals are met, contact us today!


Compliance Disclaimer:

This information contains general advice only, that is, advice which does not take into account your needs, objectives, or financial situation. You need to consider the appropriateness of that general advice in light of your personal circumstances before acting on the advice. You should obtain and consider the Product Disclosure Statement for any product discussed before making a decision to acquire that product. You should obtain financial or credit advice that addresses your specific needs and situation before making investment or borrowing decisions. Taxation information is based on our interpretation of the relevant laws as at 1 July 2018. While every care has been taken in the preparation of this information, Prosperitas Partners Pty Ltd does not guarantee the accuracy or completeness of the information. The case studies are hypothetical, for illustration purposes only and are not based on actual returns

Poole Advisory Pty Ltd ABN 15 642 040 604 is a Corporate Authorised Representative (No. 001282603) of Prosperitas Partners Pty Ltd ABN 30 662 654 453 AFSL 544 917

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