How to Make a Superannuation Contribution

It’s important to start saving for your retirement as early as possible. Personal super contributions are what you contribute to your superannuation from your net salary or after-tax income. If you’re employed, these contributions are added to your super alongside from the compulsory super contributions from your employer.

In this article, find out how to make a superannuation contribution:

  • Make sure you have your Tax File Number (TFN) as your super fund needs it to accept your personal super contributions.
  • Remember the date: June 30 every year. Your personal contributions must be in your super fund so you can receive a government co-contribution for that financial year.
  • You don’t have to make your personal contributions at one time, you can make payments throughout the financial year. You can use a superannuation calculator to give you estimates on the amount of contributions.
  • Most funds provide several options to make a payment including direct debit, through your bank account and BPAY.
  • You can also make super contributions regularly into your super account from your net salary. However, if the contributions are from your before-tax salary, these are called salary-sacrificed contributions.

Relying on employer contributions alone will not be sufficient to keep your lifestyle up once you stop working.

The good thing is, there are ways to boost your super:

  • You can make concessional super contributions. If you are employed, you can discuss with your employer a portion of your pre-tax salary that can serve as an extra contribution, also called a salary sacrifice.  Concessional super contributions are limited to $25,000 per financial year, which means that the total salary sacrifice contributions must not be more than $25,000 annually.
  • You can also make non-concessional super contributions. All you have to do is deposit money directly into your super. Unlike the salary sacrifice where payment is done before your salary is taxed, the non-concessional contributions involve money where tax is already paid.
  • If your salary is less than $51,813 per year before tax and you make super contributions after tax, you can boost your super with government co-contributions. For every $1 contribution, the government will contribute 50c, and the maximum co-contribution is $500 if your salary is less than $36,813.
  • If you are self-employed or have varying work patterns, you can claim tax deductions from your personal after-tax super contributions.
  • If your salary is $37,000 or less, you may be eligible to get a low income superannuation tax offset of up to $500 every year from the government. This is the 15% of the concessional contributions from you or your employer during the financial year.

Do you have other ideas on superannuation in Australia? Share your insights in the comments section.

Read More →

A Step-by-Step Guide to Comparing Your Superannuation Fund

For most people, it is essential to start retirement planning as early as possible. This gives them leverage in terms of comparing different superannuation products, and that time is their ally in growing their funds. But with several aspects to look into, how do you compare super funds and choose the right one for you? Here’s a step-by-step guide:

Step 1: Know the various funds available

In general, if you’re an employee, you can join a super fund through your employer. But you can also do it as an individual. The advantage of being a member of a group is that the fees are lower. Also, your super may have more growth potential than if you join as an individual.

Step 2: Collect personal data

Know your current account balance, level of contributions made during the year, investment options and returns, all fees that you pay, as well as insurance cover. You can get this information from your annual member statement. You can also gain access to these details when you register on your super fund’s website. It may likewise help to use a superannuation calculator, though the results may only be used as your guide. 

Step 3: Check the insurance

Do you have insurance cover on your existing fund? If yes, then make sure if the other fund that you’re considering offers the same type of cover or not. Look into whether you can maintain your insurance cover and for what premiums.

Step 4: Look into investment options

It is important to look into investment options and their performance because at the end of the day, you want to invest in something that offers better growth potential. Check if the fund has a solid investment strategy that’s based on expert analysis, and that you can change options later on with little to zero cost.

Step 5: Know the fees involved

The fees that you need to pay will have an impact on your investment returns. While there are fees to be paid occasionally, be wary about ongoing fees that are being deducted from your fund on a yearly basis. In general, check out all fees that are deducted from your contributions.

Step 6: Seek professional advice

Managing your super fund is a serious matter. Know and understand how it works to get the most out of your super. It also pays to seek help from a qualified individual so you will better understand aspects such as the amount of contributions, type of insurance that you need, fees involved, as well as the investment option that suits your needs and preferences.

Got other ideas on superannuation calculator and retirement planning? Share your tips in the comments section.

Read More →

Different Types of Super Funds

How much do you need to live comfortably upon retirement? When it comes to planning for retirement, you can ask an expert for superannuation advice so you can better understand the process. You can also use a superannuation calculator to give you an idea of the amount you need to contribute regularly for your super fund.

Retirement planning can be done as early as possible. There is a wide selection of super funds to choose from, so don’t be tempted to get the first one that you’ll see. Each type has its own features, and knowing your options can make the selection process easier. Here are the different categories of super funds:

MySuper

If you’re employed and you haven’t chosen your own super fund, your employer will pay contributions to your MySuper. It offers lower fees options when it comes to single or life stage investments, and life insurance on an opt-out basis. MySuper also has simple features wherein you don’t have to pay for services that you don’t need.

Retail funds

Banks and investment companies operate retail funds which offer a lot of investment options.  These are normally accumulation funds which can range from low-cost or MySuper up to high cost.

Industry funds

These are usually low to mid-cost funds, though some offer MySuper accounts. Unlike retail funds, industry funds have a smaller number of investment options. Most of these are accumulation funds. However, there are several older funds that have defined benefit members.

Self-managed super funds

For those wanting to manage their own superannuation, they usually do this via a self-managed super fund (SMSF). It is regulated by the Australian Taxation Office. This private super fund can have up to four members who are all trustees and are in-charge of making sure that the SMSF complies with laws associated with it.

Public sector funds

These are designed for employees of the departments of the Federal and State government.  This super fund offers low fees and a modest range of investment options. Some also offer MySuper accounts. New members of public sector funds are in an accumulation fund, while long-term members have defined benefits.

Corporate funds

Employers run corporate funds which offer a range of investment choices. These are usually low to mid-cost funds. Most members are into accumulation funds, while the older corporate funds come with defined benefit members.

Got other ideas on superannuation in Australia? Share your tips on retirement planning in the comments section. 

Read More →

Reasons Why Having a Hobby Saves You Money during Retirement

Many retirees in Australia fear of running out of money, and for good reason. By the time you retire, you no longer have paychecks but the bills will continue to come in. And if you didn’t prepare for retirement, you may not be able to live the life that you want after you stop working.

Having a hobby during retirement is one good way to save money – retirement money, that is! Whatever it is that you’re good at, be it arts and crafts, gardening, playing a musical instrument or pottery, you can use your hobby to generate income during retirement. With this extra money coming in, you will access your retirement funds less frequently which helps in saving money.

Another reason why having a hobby saves you money during retirement is that it keeps you busy and mentally active. It’s about doing something that you love rather than for practical reasons so you can change your lifestyle that suits you and even get a new outlook in life. With a hobby, you’ll have a relaxed, comfortable life, and this hopefully translates to a healthier you, with less hospital visits that can take a chunk off of your retirement fund.

Here are other things worth-knowing about retirement planning, superannuation, and saving money:

How much do you really need upon retirement?

There’s no definite amount, but several factors come into play, such as your lifestyle and anticipating some of your needs that can change over time. That is why it is important to start planning for retirement while you’re still working. You can also use a superannuation calculator to give you an idea of how much you need to live a comfortable life when you retire.

Start planning for retirement early.

A retirement plan is not something that most people think about when they’re young but in reality, it’s best to start a retirement plan as early as possible so you can have a lot of time to grow your superannuation in Australia and not worry about running out of money. Review your finances and assess your current situation – how much super you have, your assets, and possible income sources that can contribute to your retirement fund.

Get professional advice.

A financial adviser will be able to help you with retirement planning. He/She will also be able to give you sound advice on where to invest so your money will grow in value and keep up with inflation and other factors that can affect your savings.   

Do you have additional tips on retirement planning and superannuation? Share your ideas in the comments section.

Read More →

At what age are most Aussie’s retiring today

According to the Australian Bureau of Statistics, 61.5 years old was the average age of people who retired in the past five years. The numbers are slightly different for males and females and the time at which they entered the workforce.

But, with the current life expectancy of around 82 years, Australians are in line to need enough money to last them for 20 years after they retire.

Now of course not everyone will retire at 61, nor live to 82. Some people want to work well beyond retirement age, others aim to retire by the time they are 40. Whatever your circumstance, it is important to consider at what age you intend to retire and how you will manage when you do.

A basic way to do a retirement plan ‘check-up’ is to use a superannuation calculator.

A superannuation calculator will give you an idea of how much money you will have at retirement, and how long this will last you. If you already have an idea how much you want to spend each year during retirement, then a superannuation calculator will tell you how much you will need in super for you retire.

The age at which you retire will ultimately depend on your individual circumstances and preferences.

There are various rules and restrictions which may make using superannuation before you are 65 years old undesirable. This doesn’t mean you can’t retire before then, only that you might need other means to support yourself.

Another thing to consider is the change requirements to be eligible for the aged pension. The widest-reaching of these changes is the eligibility age increasing from 65 to 67 by 2023, and with increases to 70 earmarked.

While some people intend to work until they are eligible for the aged pension, not everyone will want or be able, to work until they are 70. If this is you, then using a superannuation calculator to work out your current position is the first step to take.

Setting some goals and acting now to achieve those goals, is the best way of ensuring you can retire at the age you want.

Read More →
Bitnami