Superannuation
Superannuation Overview
Superannuation is a tax effective means of putting aside money during your working life for use in retirement to sustain a certain lifestyle you’re accustomed to.
Within superannuation various investments can be held such as shares, property, cash etc either directly or via managed funds.
A Superannuation fund is a concessionally taxed investment trust.
Generally, superannuation balances cannot be withdrawn until you are at least aged 55 and fully retired.
Superannuation funds can be run by an employer as a company or corporate fund, an industry superannuation fund that might relate to one’s workplace such as the health industry or the hospitality industry for example, a fund manager as a personal fund or superannuation can be self managed by you (known as a Self Managed Superannuation Fund.)
Superannuation is extremely complex and detailed.
Throughout its history, legislation applicable to superannuation has changed on an annual basis and continues to change as Governments provide greater incentives to contribute.
Why Do You Need Superannuation?
Let’s consider the following: -
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The Australian Bureau of Statistics has shown that we are living longer meaning we require more funds to sustain our lifestyle for a longer period of time and we need to have funds to help us pay our way. |
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We're an aging population.
There are millions of people currently over the age of 65 in Australia. Whereas older people comprised 12 per cent of the population in 1998, they are projected to form almost one quarter (24 per cent) of the total population by 2051.
This means there will be fewer people in the workplace to help fund social security aged pensions. |
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Many retirees do not have adequate savings to help fund their retirement.
Again, statistics show that government pensions and allowances were the principal source of income for 66 per cent of couples and 80 per cent of singles aged 65 years and over. |
As a consequence, the government provides significant tax incentives to encourage all of us to use superannuation to save for our retirement.
Ensuring that you have adequate superannuation may be the difference between a comfortable retirement and one that is plagued with financial concerns.
So how much superannuation is enough?
Research has identified approximately how much it costs for an Australian to have a comfortable lifestyle in retirement.
This is something that will vary for each person and couple. What sort of lifestyle do you want?
Levels vary between individuals and your financial adviser will discuss your needs and requirements.
Having access to your superannuation money
As from 1 July 1999 any contributions into superannuation and the subsequent investment earnings must remain preserved until a condition of release has been satisfied.
In order to be able to withdraw your benefits from superannuation you must first satisfy a condition of release relevant to the preservation status of your benefit.
Therefore, while tax effective, you must be aware that there are greater restrictions placed on accessing funds placed into superannuation.
As stated earlier, superannuation is extremely complex and detailed. It is vital that you talk to your financial adviser about the various aspects of law controlling Superannuation.
Together you can determine what opportunities are best for your particular situation.
Remember, your lifestyle requirements will differ from everybody else’s so you are in the best position to determine your needs.
Thank you for visiting this area of our website and don’t hesitate to contact AussieWise Finance Group to discuss your superannuation requirements further.
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