Recent changes to superannuation
Key takeaways:
- Increased contribution limits from $25,000 per year to $27,500 per a year
- Market exposure and volatility
- Saving for a house deposit
4 Min Read
For many individuals, superannuation is a distant thought, something that is taken into more consideration later in life when retirement is apparent. However, the reality is that the earlier you plan for your retirement, the more certain your retirement will be. As the retirement age is gradually increasing from 65 to 67, it’s a good idea to begin structuring your superannuation and your retirement plan. With life expectancy also increasing you will need your retirement fund to be one that can support your life post-work. The government has recently made changes that can benefit you and your retirement plan, which is particularly needed post-Covid, given the uncertainty of the future.
Changes to Concessional Caps Recently, the annual concessional contributions cap has increased from $25,000 to $27,500 per annum. Not only does this allow you to contribute more to your super on a before-tax basis, but it can also potentially reduce your taxable income! Increasing your super as much as you can before you stop working can provide you with the security you need to fund your entire retirement.
Market exposure You may not know, but within your super you are actually invested in the stock market one way or another. The funds that you have within your super account actually give you exposure to the stock market. Despite the market and its volatility in current times, the longer you are invested the more likely you will receive better investment returns, effectively growing your super without you needing to manage it that often!
Saving for a House Deposit Via Super Did you know that for first home buyers you can save for a house deposit by super your super as a savings vehicle? Beginning in 2017, individuals can make voluntary contributions towards their super and pay a lower super tax rate of 15% instead of the income tax rate, effectively helping them better save for a house deposit. With the capped amount now increasing from $30,000 to $50,000, many people are able to become house owners with the help of their super!
Please feel free to contact our financial planners in Yarraville, Seddon, Footscray, Williamstown and Altona.
