When was the last time you opened that superannuation statement and actually read it?
If you’re like most people, you probably don’t take much notice of the detail in that envelope because you can’t touch that money until you retire anyway, right? Wrong!
Taking a head-in-the-sand approach to your superannuation could mean you’re missing opportunities to grow and protect that nest egg.
Here’s what you could be missing:
- Cut your tax bill
Salary Sacrifice can allow you to swap the income tax rate you would normally pay on your earnings with the lower 15% super contributions tax rate. So, you pay less tax on the money you’re voluntarily contributing to your super.
- Skip the insurance medical
If you face insurance cover exclusions because you’re over 60 or because of a pre-existing condition, you could benefit from a large super fund that automatically offers new members set levels of death and total & permanent disability (TPD) co-contribution insurance cover, without a medical examination.
- Cheaper insurance cover
Most publicly offered super funds purchase insurance policies in bulk, so they can negotiate a better deal with insurers and pass the savings on to you.
Most large super funds also allow you to continue your insurance cover if you leave your current employer, which can be hugely beneficial for people who might have trouble accessing the same level of cover elsewhere.
- Invest in bigger assets
By pooling your retirement savings with other super fund members in a large super fund, you can reap the rewards of investments you wouldn’t be able to access as an individual.
- Pay less tax on your investments
Let your super funds work as a tax-effective ‘wrapper’ around your investment. Income generated by investments in assets in your own name, outside of the super system (eg; shares or property) is taxed at your normal marginal rate. But did you know that within the super system, income from those same assets is generally taxed at a lower rate?
- Protect against bankruptcy
Particularly important for small business owners and professionals, many people don’t know that holding your retirement savings in a regulated super fund generally means your super benefits are protected from your creditors if you’re ever declared bankrupt. (Superannuation payments received before you go bankrupt however, are not protected).
- Free money (from the government!)
Making non-concessional (after-tax) contributions into your super fund could mean receiving a bonus top-up from the federal government called a ‘co-contribution’. Depending on your earnings, this co-contribution is tax-free cash paid into your super account to supplement your retirement savings (if your super fund has your tax file number).
Talk to a financial advisor today to learn more about the advantages of taking close notice of your super and the ways you could be making it work harder for you.