Age plays a big role in your superannuation planning. This is a long term investment that should be started as soon as possible to make it easier to reach your goals and live comfortably after retirement. While you may have other types of investments out there, you may be tempted to shift it all into your super to get the tax savings. Before you do, make sure you understand the benefits and the best strategy based on your age and savings goals.
Saving in your 30s and 40s
This is the best time to begin superannuation planning if you haven’t started already. You still have years to accumulate wealth. This is also the best time to begin a strategy when it comes to your super fund. Before you settle on a saving strategy, make sure you have answered the following questions:
- How much do I need for retirement?
- Will I stay in my current super and, if not, which super will I choose?
- How much will my contributions be?
- How will my super funds be invested?
- When will I have enough saved to retire?
Saving in Your 50s
This is usually a time that many Australians have to worry about outstanding debts and other expenses like child rearing costs or education fund commitments as part of superannuation planning. These factors can make it harder to keep saving at the rate you need to for retirement.
This may also be the decade that you reach preservation age. For individuals born prior to July of 1960, preservation age begins at 55. Anyone born after 1960 but prior to 1964 may have a preservation age in the 56 to 59 year range (depending on the exact date of birth). And anyone born after July of 1964 has a preservation age of 60.
Once you reach your 50s, you may be eligible for more tax deductions and higher contribution limits. This provides more flexibility as you near the age when you may need to use your retirement investment to live on.
Saving in Your Late 50s and 60s
For many, this is the time right before retirement. This is also a good time to start putting as much money as you possibly can into your super. You will still have to survive day to day, so make sure your contributions aren’t causing financial hardships in the present.
The TRIP transition to retirement pension becomes available during this period. You can use this option to increase savings in your super by sacrificing salary to receive helpful tax concessions.
Retirement: 60 and Beyond
Once you have arrived at retirement age, utilising your super is a must. After you retire, you can withdraw your funds without any taxes, unless they came from an untaxed source. Many Australians choose to move other assets and investments into the super at this time. Whether you’re a young adult or at preservation age, Bis Cosgrove can help you with superannuation planning. Contact Brian today to discuss saving for your future.