Another financial year closes

While it is great to be putting the pandemic years behind us, it seems every cold and flu and respiratory bug that has not been able to run through the population in the past four years, is suddenly making their appearance this year.

As anyone who has spoken to me in the past week knows, I sit here writing this with a full-on head cold despite having had both flu and covid jabs earlier this year. My warning to all, is stay safe and when in doubt, wear a musk this winter.

Maybe that’s a good way to point out that just as winter follows autumn, here we are again in June and facing the last month of the financial year and with that, our last chance to take whatever steps we can to minimize our tax obligations.

For most people, superannuation offers one last chance to boost their tax deductions and so I thought I would provide a simple run down to the various types of superannuation contributions you can make and how they may work to reduce your overall tax bill.

Like most things regarding superannuation, it’s a bit complicated so if you are not clear, please call me or your tax agent. You don’t want to miss the opportunity to reduce your tax bill if you can and putting money into super is the best way of doing this.

Reducing tax of course is not the only reason for making extra super contributions. After paying off your own home, I believe putting money into super is your next best financial decision, particularly for those close to or nearing retirement age.

This is the case even if you believe you have left your run too late and the amount of money you have in super is so small it is unlikely to make much difference to your retirement years. Nothing could be further from the truth.

Using back of envelop numbers, $100,000 can easily generate at least 6 per cent a year or income of $6000 a year. That means an extra $500 a month in your pocket in addition to your age pension entitlements every year throughout your retirement.

If both you and your partner have $100,000 in super, you can be looking at an extra $1,000 a month in addition to the age pension. This will make a big difference to how much you enjoy life during your retirement.

The one warning I will make regarding super is the rise of self-managed super funds especially among younger Australians. For most, there are much better, much cheaper and easier options on the market which will meet all your retirement needs with a lot less hassle.

Finally, despite the weather being cold and chilly and most of use wanting to stay indoors, if you don’t have a will in place or you haven’t updated your will in decades, make this the month that you take this important step and sort out your estate planning issues.

In the meantime, stay warm and safe.