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Superannuation has been in place for many years now and is a very tax effective way to save for your retirement during your working life.
Your contributions are not taken from your gross salary but paid for by your employer so there in essence there is nothing missing from your weekly pay hence there is no tangible sacrifice on your behalf.
Various ways of investing your superannuation are available to you and this allows you or your super fund manager to diversify and maximise your returns.
Some of the investment options for your superannuation are:
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Shares in the Australian or global market |
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Investing in property or a property trust |
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Managed funds |
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Cash or bond markets |
In general, superannuation balances can only be withdrawn or rolled over once you turn 55 and are in full retirement.
There are some circumstances where superannuation can be utilised and this would be under the 'hardship' clause although the parameters surrounding the release under this clause are very stringent.
Who can run a superannuation fund?
There are a number of ways in which a superannuation fund can be run or managed, here is a list for your reference:
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An employer run superannuation fund |
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A corporate run superannuation fund |
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A super fund run by an industry type such as the health or hospitality industry |
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A superannuation fund manager can run a fund |
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You can also ‘self manage’ your superannuation |
Let's now take a look at some key questions that are commonly asked about superannuation, these questions are:
Why Do You Need Superannuation?
There are many reasons why you need superannuation; this is one of the reasons that superannuation has become a mandatory part of employer's obligations in providing the minimum percentage the government legislation states:
In summary you need super for these reasons:
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The ABS (Australian Bureau of Statistics) has data which reflects that as a population we are generally living longer and we must have an adequate amount of superannuation to cover our lifestyle expenses as we reach greater ages than ever before |
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With the population ageing there is a real need to ensure that all Australians have an adequate superannuation funds in place to sustain them in their retirement years. Given that there will be a greater percentage of retirees in years to come, this means that the working populations tax will not be adequate enough to provide an aged pension as we are accustomed to today |
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The ABS shows that government pensions and allowances are the principal source of income for in excess of 60% of Australians aged 65 and over |
As an incentive, the Australian government provides substantial tax benefits for superannuation contributions so investing in super is a wise choice to make.
Making sure that you have adequate superannuation in place is imperative in ensuring you live comfortably in retirement instead of being faced with regular financial concerns.
So how much superannuation is enough?
This is such a variable as the question of enough really depends on the lifestyle you are accustomed to.
Do you want to have yearly holidays, run two vehicles for you and your partner and splurge on the grandchildren?
Or are you satisfied with a weekly outing and a relatively sedate lifestyle catching up with friends?
The answer to this question lies with you but if you're unsure on what to think then please contact us and we can arrange for a financial planner to have a chat or come and see you at a time which suits.
How do I access my superannuation money?
Legislation was introduced in July of 1999 which states that superannuation contributions from this date and the interest earnings from these contributions must remain preserved until retirement age, or until a condition of release is satisfied.,
To obtain access to your superannuation funds you need to satisfy a condition of release, be it as simple as you retiring at age 55 or above or your genuine need to claim hardship to obtain access to your funds.
Retiring is a relatively straightforward way in which you can access your superannuation funds and you can choose to take this as a lump sum or to place it in an annuity which pays you a regular income.
There are certain thresholds where your income will not affect the aged pension entitlements although we suggest you speak to one of our financial planners in regard to this.
At the end of the day it is your lifestyle requirements which will dictate your superannuation investment plan. Remember, your lifestyle will always be different to anybody else's so you are in the best position to determine your needs with the help of one of our financial planners so we invite you to contact us and arrange an appointment.
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