What to do if you are not happy with your super?

As anyone who has read my book, The No-Regrets Guide to Retirement and even these newsletters will know, I am a big fan of superannuation, both in terms of the significant tax breaks afforded to it and the unrelenting benefit of compound interest, to generate significant wealth.

So, it staggers to me when I come across the occasional client, or more likely a would-be client, who is not equally enthused by superannuation as I am and if you’re reading this and thinking well, I’m not that impressed by my super either, I would urge you to talk to me.

Firstly, you do benefit from having superannuation contributions forced upon you, although it can be discouraging to see more than 10 per cent of your pay packet disappear before it gets to your pocket.

The benefit of this though is that every year, year on year, income is being earned on investments, which in turn is being proactively invested, which in turn is generating more income to be invested. It’s the ultimate snowball experience.

Secondly there is the beneficial way savings within superannuation are treated in terms of your tax obligations and the fact you can make contributions to super, which in turn will reduce your tax obligations on your other income.

The earnings earnt on investment held within superannuation is taxed at the relatively benign tax rate of just 15 per cent, compared to savings outside of super being taxed at your marginal tax rate, which is likely to be at least twice that rate.

Also, you can contribute up to $30,000 a year now and claim it as a tax deduction. You should speak to your tax agent first to determine just how much you can claim to reduce your overall tax bill but that is a great incentive to put even more money into super.

If you are on a low income, you should be looking to maximise your contributions wherever you can and consider taking advantage of Government schemes such as the co-contributions scheme for low-income earners.

While it may not look much at first glance, don’t forget the snowballing effect of superannuation savings and that every dollar going into your super will gather earnings and grow and help boost the amount you will retire on.

Finally, if you take advantage of using a quality superannuation account like Netwealth and have chosen to invest in the big banks and other big Australian companies commonly referred to as the retiree’s best friend, you can’t help but be impressed.

The Australian share market has had an incredible run over the past twelve months and while we know it will pullback at some point, it’s impossible to not be impressed by the performance of you super recently.

If you’re not, something is very wrong, and you should be making an appointment to talk with me as soon as possible.