Making your Super Count

The single biggest issue I face is ensuring clients make the most of the opportunities contained within superannuation and those opportunities are significant when you retire, as all the assets held within super become tax free.

So even if you have a modest amount in super, it is possible if you are still in the workforce earning just an average wage, to really build your existing savings so when you do retire it can make a real difference to your life.

Next speak to me about making investments that will make your money work hard for you without taking undue risks. Buying a stack of Commonwealth Bank shares is a great example where you can benefit from significant capital growth and an annual return of 6 per cent including franking credits.

Consolidate your super accounts. I still find clients with several super accounts lying amongst their papers. It has never been easier to consolidate your super into one account and doing so, will stop you paying unnecessary fees and charges.

While we’re on this subject, there is some $16 billion in potentially your money in lost super accounts held by the Australian Tax Office. If you think you had a super account way back when and you’ve lost track of it, let me know and we can track it down for you.

Review your super at least once a year. There will be the normal ebbs and flows of super accounts gaining and falling back in value but overall, you should be seeing significant gains in your super account and if not, you should be asking why.

Take advantage of any government tax benefits that could help you boost your superannuation savings. The low-income earner co-contribution is a good place to start as is the low-income earner superannuation tax offset account.

If you have a partner, look at ways of making spousal contributions. The biggest challenge I face is getting money into super, and if you’re part of a couple, it doesn’t really matter which account your super is in, just make sure you put as much money into super as possible.

Under the current super laws, you can contribute up to $27,500 to super and claim a tax deduction for it but you can contribute a further $110,000 and not claim a tax deduction for it. If you ever receive a windfall such as an unexpected tax refund, make sure you add it to your super savings.

The big advantage of super is that it is tax benign, by that I mean the tax on super savings is just 15 per cent, which is probably more than half the tax you are paying on your income and other savings. If you claim a tax deduction for contributions, you will be taxed at 15% but if you don’t claim a tax deduction, you can contribute funds to super and pay no contribution tax.

Importantly, any funds you place inside super will steadily increase in value as interest paid on capital becomes part of the capital and slowly snowballs as you move closer to retirement to make your super savings steadily greater.

So even if you have a modest amount in super now, don’t be discouraged. There are some simple steps you can take now that will make a big difference to your life in retirement.