So why super?

When I speak with a client for the first time, typically something very quickly becomes apparent. They don’t like super. They feel it was forced on them, they don’t really understand it and many, just have a gut feeling that someone is making a lot of money out of their super, but it’s not them.

I sympathise with how they feel. For most, their only experience of super is receiving a statement once a year in the mail. If they are lucky, the balance has increased but often, for no apparent reason, the balance has fallen.

So let me take a moment to explain why I believe superannuation is the financial cornerstone of planning every successful retirement and I mean every successful retirement.

Firstly, superannuation contributions are about the only bona fide tax deduction left. Sure, you can claim a small amount these days for working from home, but most claims have been closed down or restricted.

Superannuation contributions remain the last significant tax deduction for most wage earners. You can contribute up to $27,500 each year to super, including your super guarantee contribution, and use it to reduce your tax obligations on other income.

That means money that would otherwise go to Canberra is staying in your hands, albeit in your super account. If you hate paying tax, then you should proactively contact your tax accountant before June rolls around, to see if increasing your super contributions will reduce your tax bill this financial year.

If the answer is yes, then you need to call me, and I can make sure your contribution is correctly processed to ensure that it will reduce your tax bill, and then together, proactively ensure it is invested as safely as possible to achieve the best return for you.

However, the really exciting part of super starts when you retire and yes, there is an exciting part of super!

Once you formally retire form the workforce and are aged 55 years or older, we can use your super to start your own personal pension or regular payment stream. As soon as this happens, all the assets within super supporting your pension become tax free both in terms of any income generated as well as any capital gains. More, the pension paid to you is completely tax free.

Stand aside every billionaire in the nation with funds sheltering from tax in the Cayman Islands. At this point, when you retire, your humble super account can become your own personal, legal tax haven.

In fact, if you retire and your only assets are the house you live in and all your savings are in a superannuation account, which is paying you a pension, you will never need to lodge a tax return again. Maybe I spent too many years working in an accountant’s office, but I find that really exciting.

I know what you’re about to say. “But I just don’t trust super, and the Government is always changing the rules!”

I get that. Even our current Federal Government, who campaigned at the last election that they were not going to make any changes to super, are about to make changes to super but I write more about that in another article in this newsletter.

Trust me. There is one thing neither side of politics is going to step back from. The Australian Government decided thirty years ago, and this has been supported by both sides ever since, that it will use the tax system to encourage all Australians to provide for themselves in retirement.

That their chosen vehicle for doing this is the superannuation system. So, while you might hate super, you really need to take the time to understand it or have someone like me, on your side helping you to make the most of it.

Sure, there will always be an age pension, but it will be something that fewer and fewer Australians receive, and it will become increasingly harder and harder to survive on it. So, let’s work together to make the most of your super and create the best possible retirement for you, no matter how far off it is.