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Knowledge gives you super power

Knowledge gained from working with a financial professional makes a significant difference to how prepared Australians feel for retirement, according to MLC’s Australia today report.

Assessing the financial and lifestyle habits of over two thousand Australians, those who used financial planners or advisers were significantly more likely (21%) to feel ‘very well or fairly well prepared’ for retirement, more than double the figure for those who did not use a financial professional (9%).

If you want to build your super balance faster, it’s clear that engaging the help of a financial professional is a wise move.

Do you know you super balance?

Most superannuation funds provide an online platform where you can review your super and investment portfolio. Some link your super balance to your online banking, to make it easier to watch it grow.

MLC customers can log-in to view their super balance online here. Those logging in for the first time can register here.

No matter where you have your super, it’s important to view the account as another bank account.

If you have a whiteboard at home, you could write the balance there and adjust it year-on-year. Chart how much it’s grown each year and celebrate when you achieve a milestone. You’ve worked hard for your super and it may be the biggest investment you ever have.

Top five facts you need to know about super1

There’s so much to learn about super, but to help you, here are the top five things you need to know about super right now.

1. Super guarantee

This is the guaranteed minimum amount your employer must pay into your super account, which at the moment is 9.5%.

2. Tax on super contributions

Your employer contributions are taxed at a maximum rate of 15%, unless you earn over $300,0002 per year, in which case your contributions are taxed at 30%. How much tax are you paying o your regular income? Does it make financial sense for you to top up your super?

3. Tax on super investment earnings

Earnings on your super fund’s investments are also taxed at no more than 15 percent. If you’re drawing a pension from your super account, then the earnings on your super savings are exempt from tax.

4. Co-contributions into your super

If you make after tax contributions to top up your super, the government may put some tax-free money into your super account, which is known as the co-contributions scheme.

5. Contribution caps and tax free super benefits for over 60s

The general concessional contributions cap is $30,000 for the 2016/2017 year, and applies to anyone aged 48 years or younger as at 30 June 2016. The temporary higher concessional cap of $35,000 for the 2016/2017 year applies to anyone aged 49 years or older as at 30 June 20163.

If you’re over sixty years, you pay no tax at all on any super benefits. When you receive a pension (which super funds may also call an income stream) from your super fund, the earnings on the assets that finance your pension are exempt from tax, even when you retire before the age of 604.

How can a financial professional help?

A financial professional can help you structure your payments and super investments with the aim of maximizing your super balance, so you can enjoy the retirement you’ve imagined. You work hard all your life, don’t leave your retirement up to chance.

 

Read more from Australia today

Financial advice boosts confidence in retirement

Financial professionals reduce reliance on government support

Investing for retirement pays off

Pre-retirees are toping up their super

Will your super be enough in retirement?

A path to saving retirement

Solving the gender gap in retirement


Important information

MLC and IPSOS, Australia today report, Aug 2016.

1 SuperGuide Australia, Sept 8, 2015.

2 As proposed in the 2016 Federal Budget, this Division 293 tax income threshold will reduce to $250,000 pa from 1 July 2017.

3 As proposed in 2016 Federal Budget, the concessional cap will reduce to $25,000 pa regardless of age from 1 July 2017.

4 As proposed in 2016 Federal Budget, fund earnings in a Transition to Retirement Pension (TTR) will no longer be tax exempt (the tax paid on earnings will be 15%) from 1 July 2017.