CHC Planning solutions for the future?
Long term investments with life-long impacts
Superannuation is a type of long term investment designed specifically to help you accumulate the savings you need to live the life you want in retirement. Money is put aside by your employer over your working life to live on when you retire from work.
Super is important for you because the more super you save, the more money you will have for your retirement.
You can only withdraw your super money in certain circumstances – for example, when you retire or turn 65.
Why is superannuation so important?
The main idea behind superannuation is to help you build a nest egg which you then use to create an income in retirement (or semi-retirement).
You might think of super as just a percentage of your salary that you can’t access. But it’s important to remember – it’s your money, it’s just being held for you until you retire.
Including it as part of your financial plans can be important for a number of reasons:
- The Age Pension may not be enough for a comfortable retirement
- You may not be eligible for the Age Pension
- You may spend over twenty years in retirement and your money will need to last
- Your super enjoys the benefits of compound interest and a long investment time frame, it could be your largest asset by the time you retire
- The government is offering attractive tax incentives.
How tax-effective is super?
For most people, saving through super can be much more tax effective than saving the same amount outside super. Firstly, any contributions your employer makes are taxed at a maximum of 15% (for anyone earning up to $250,000 per year) and 30% (for anyone earning more than $250k per year). Secondly, any returns on your super are taxed at a maximum of 15%, rather than your marginal tax rate which could be as high as 45%.