The current average superannuation balance at the time of retirement in Australia is $292,500 for men and $138,150 for women (2013/14).1 The good news is that these average balances are increasing, however the ASFA Retirement Standard recommends that $545,000 in superannuation is required for a single person to live a comfortable lifestyle in retirement. 2
Building your superannuation balance is most effective when you invest regularly and there are many additional strategies which can help boost your retirement savings as well, including:
If you want to grow your superannuation, the most important thing you can do is seek professional financial advice.
Cotter Financial Services can help you understand your complete financial situation and appetite for risk, as different superannuation investment strategies may be more appropriate at different stages of your life and for your investment style.
For example a growth strategy may be more appropriate for long-term investors when retirement is more than 30 years away, whereas a balanced or conservative strategy may better suit those who prefer lower risk and who wish to access their super within the next 5 years.
Superannuation is one of the most tax-effective schemes available, with contributions and earnings generally taxed at just 15%, and salary sacrifice arrangements are another way you can save tax and increase your savings.
You can pay additional contributions of up to $30,000 (including your employer’s 9.5% contribution) from your pre-tax salary or up to $35,000 if you are over 50. If you exceed these caps penalties apply and all contributions to super are preserved until you meet a condition of release. Your salary sacrifice contributions are taxed at 15% as opposed to much higher marginal tax rates when you are earning more than $37,000 per year.
If you are self-employed you can also claim a tax deduction on your superannuation contributions. As with salary sacrificing arrangements, you are able to contribute up to $30,000 or $35,000 if you are over 50, with your contributions taxed at 15%.
Making additional regular contributions to your super from your after-tax income can also increase your savings dramatically.
There are also other contributions which may apply for low income earners who are making after-tax contributions.
Self-managed Super Funds, or SMSFs, can also be an effective vehicle for increasing your returns. They can be an appropriate choice for those who wish to invest in property and manage their own investment choices, however there are many responsibilities associated with SMSFs so it is imperative to seek professional advice to understand if a SMSF is right for you.
Planning now and making the most of your superannuation savings can help you prepare for the retirement of your dreams. Find out more about how you can super-size your savings for your retirement – contact Cotter Financial Services on P: (07) 3333 2610
The information provided is general in nature and does not take into account your particular investment objectives, financial situation or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Cotter Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Pty Ltd ABN 54 139 889 535 AFSL 357306 Australia Credit Licence No 357306 trading as Fortnum Financial Advisers.