What if we said by making a lump sum payment into you super by July 1 could potentially boost your retirement for a glamorous holiday, would you read on? Well you had better keep reading….
There have been some recent changes to superannuation, which will have an impact on many people, particularly those on the brink of retirement. We’ve bought you AMP Financial Advisor and superannuation expert Mark Borg to talk you through changes to super and what that can mean for you (and maybe your holiday savings account).
Big changes to super rules in Australia are kicking in on July 1, so if you’re already retired or getting closer to it then you may have just a small window of opportunity to get a substantial lump sum into your super and reap the benefits. From July 1, an annual after-tax (non-concessional) contributions cap of $100,000 will apply, replacing the current cap of $180,000. Also after July 1, if you are under 65, you will only be able to bring forward a maximum of $300,000 under the new bring-forward rules. At the moment, if you are under 65, you still have an opportunity to bring forward two years’ worth of after-tax contributions, so up to $540,000 into your super.
It’s also worth noting that if you have a total super balance greater than $1.6 million on 30 June, you will not be able to make any non-concessional contributions next financial year.
So, what does all this mean for you?
Each individual person will have a set of unique circumstances, so it’s important to seek advice from a financial advisor. However, recent financial modelling from AMP has found that a 55 year old making a significant contribution by 1st July could boost their retirement position by as much as $10,648. That money could be used to pay for a glamorous stay in one of South Africa’s luxury private game reserves once retired.
In the lead up to the end of financial year, here’s a few quick tips for making your super do the heavy lifting while you relax into retirement:
1. Seek professional advice
We know tax and superannuation can be daunting topics, and sometimes it feels easier to just ignore it and hope for the best. Seeking out professional advice can take all of the stress out of financial planning, planning for your retirement and making sound investments that will continue to work for you. Outsourcing these decisions to someone you trust can not only take some of the worry out, but can actually be beneficial in finding you the best financial options to achieve your goals. What’s not to like?
2. Get excited for the future
Imagine the lifestyle you want in your retirement and take active steps to make it happen. Most people need about 65 percent of their pre-retirement income to maintain their lifestyle, but it is important to think about what kind of lifestyle you are seeking in retirement. If you are unsure, you can use tools like AMP’s Retirement Simulator to get an idea of how much you will need and things to consider.
3. Look into budgeting and super tracking apps
Most financial institutions have apps these days and while they may seem intimidating at first, they are by and large remarkably easy to use and a great way to keep across what is happening in all of your accounts, including your super. Being an informed consumer is key to getting the most out of your finances.
4. Take stock of what you’ve got
Do you have assets? Are you planning any large investments in your retirement? Do you have any dependents? These are all questions to consider leading into retirement, knowing the answers to these early on can have a huge impact on your super.
5. Every little bit helps when it comes to financing your future
Even if you can’t capitalise on the current NCC caps, making any voluntary contributions to your Super will be beneficial when building your retirement nest egg. And, from 1 July all individual contributions will be tax-deductible, within certain limits, meaning small contributions can go a long way to achieving your retirement goals while potentially providing an immediate tax benefit.
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