Financial Advice For You Superannuation

Credit is to be given to Wealth & Retirement Solutions for their contributions to this article.
Website can be found here: wealthandretirement.com.au – Brisbane Financial Advisors

Lately, a lot of debate has been directed at superannuation. According to public records, superannuation funds have accumulated vast sums over the years, with the total amount estimated to be over two trillion Australian dollars. The debate around this subject is partly due to this accumulating sum.

To understand the importance of superannuation, we will have to first define what it is exactly.

What Is Superannuation? 

Superannuation is a government arrangement in which working citizens have to make tax-efficient savings for their retirement. Employers are supposed to bring forth superannuation contributions of up to 9.5% of the earnings of an employee to the employee’s chosen superannuation fund.

As Financial Planners Townsville would suggest, employees can also make additional, pre-tax or after-tax, contributions to the super fund of their choice. The contributions are then invested in a variety of investments. It is worth noting that there is a list of allowed assets; these are mainly considered low-risk investments.

Workers can withdraw the cash they have invested, and the accumulated interest, in their superannuation fund(s) when they near retirement or cease working after retirement.

Tax Efficient Savings

All pre-tax contributions made to a super are taxed at a significantly reduced rate of 15%. All income from super funds is taxed at this reduced rate as well. As you can see, working citizens can reduce their tax liability as they save for their retirement.

Retirement Benefits

Members can withdraw their investment in superannuation funds in whole or in part. The main aim of saving through a super is to supplement the Age Pension that retired workers receive from the government.

Since the average government pension is too low to maintain a comfortable life after retirement, the income received from superannuation savings can be used to supplement this income and provide for a healthy lifestyle after retirement.

According to the current superannuation guidelines, members can withdraw their savings in part or whole. This provides members the freedom to decide how best to use their savings. For instance, members can use their savings to purchase other assets or even take that delayed holiday they always wanted to go on.

Conclusion

Alternatively, savers can transfer their savings to their pension. This will help increase their pension income, to maintain a comfortable lifestyle, essentially spreading out the benefit period. In conclusion, superannuation should not be considered as a means to invest one’s income. It provides workers with a tax-efficient way to save for their retirement.


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