After working for almost all our life, retirement should be stress-free, job-free, and child-free. It should give us the freedom to enjoy life to the fullest. This can be by travelling, doing what we always want to do, or spending time relaxing and having fun.
But at what cost?
Living a good retirement life can be costly. And most Australians are retiring with nothing.
In fact, according to the survey conducted by Mortgage Choice’s Diversified around 54 per cent of Australians do not give retirement savings serious thought until they are 50 or over. More than half of the population are delaying saving for retirement.
Is saving for retirement that hard?
The answer is, No! With super, Australians can easily save for their retirement.
For most people, superannuation is the most tax effective way to save for retirement. And, just as importantly, it is the most tax effective way to generate a retirement income.
How? Here is an example to show you the benefits of super.
Let’s say you decide to invest $10,000 of your salary. If you invest it via super funds, from your pre-tax salary, this is how your contribution will be taxed (assuming it is part of a salary sacrifice arrangement):
- Firstly, you won’t have to pay PAYG tax on the $10,000 of salary.
- But once in your super fund, a tax of 15% will be levied, leaving you with $8,500 invested.
Compare that to investing your $10,000 outside of super. In that case, you’ll have to pay PAYG tax, leaving you with just $6,100 (assuming your marginal tax rate is 39%) for investment wherever you like.
The earnings generated by the investments outside of super will be taxed at 39%. However, the earnings generated by investments in your super fund will be taxed at only 15%.
In short, here are the pros of super:
- Low tax on contributions
- Low tax on earnings in the fund• Little or no tax on retirement income (if finances properly arranged)
If you want to know more about the benefits of super, you may download our fact sheet here.
Also, if you want to start saving for your retirement with super, I can help you, just contact me at 03 9810 3666 or via email.
About Ben Seeger
Ben Seeger is the Financial Advisor of HTA Wealth who assists individuals and businesses in managing their wealth and finances. He is also an expert in creating the best wealth strategy for his clients in order for them to ensure a successful and stable future.