For many people, super is one of the best ways to grow your wealth, as it provides significant tax concessions to help you save for retirement.
What is super?
Superannuation is a specialised type of investment designed to help you accumulate a significant level of savings for your retirement.
To encourage you to save for retirement, the rules provide various tax concessions for super investments. For most people, these tax concessions make saving through super more tax-effective than saving outside it, which means their savings may grow faster.
In return for the tax concessions, the rules restrict when and how you can access your super – generally you need to wait until you retire after reaching what is known as your ‘preservation age’. Your preservation age will be between 55 and 60, depending on your date of birth.
Why is super important?
Australians now have a higher life expectancy than ever before. Current figures (Australian Government Actuary. Australian Life Tables 2010-12) show that on reaching the age of 60, the average man will live for another 23 years and the average woman another 26 years.
It is unlikely that the government Age Pension alone will give you the financial freedom you want for the 20 or more years you are likely to spend in retirement. The Age Pension is designed to provide a basic income, but many people want a lot more from their retirement years including overseas travel, dining out, spending more time with their families and enjoying a more relaxed lifestyle.
Things to consider:
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Super is one of the largest investments you will ever make in your lifetime
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The tax concessions can make it a great way to save for your retirement
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Super regulations are changing constantly so it is important to get professional financial advice to plan for a better and more secure lifestyle in retirement.