Superannuation is a way to save for your retirement. This form of savings is where money is set aside by you and/or your employer and invested for your future retirement. Access to superannuation is generally restricted from until you reach your preservation age (between 55-60 depending on your date of birth). Contributions paid into a complying Superannuation fund are typically invested in a range of assets, such as cash, property and shares.
The money comes from contributions made into your super fund by your employer and, ideally, topped up by your own money. Depending on your income and circumstances, the government may add to it through co-contributions or via the low income tax offset.
Over the course of your working life, these contributions from you and your employer add up, or 'accumulate'. Your super money is invested by your super fund so it grows over time.
How much money you will need in retirement depends on the level of income you want during your retirement years, and the number of years that you’ll be relying on your own funds. The higher the income you want, and the longer you need it, the more money you’ll have to save before retirement.
At AAS, our Superannuation Specialist Advisers have an excellent understanding of the various super options available and can help you to calculate the amount of money you may need in retirement. Our superannuation advice also covers:
- Ascertaining the appropriateness of additional superannuation contributions
- Strategies including retirement planning and maximising death benefit payments
- Superannuation investment rules including borrowing for property in superannuation
- Self Managed Superannuation Funds (SMSF).
Superannuation strategies need to be tailored to the individual and need to ensure you are paying minimal tax, creating maximum wealth and ensuring you take full advantage of the possibilities for your family upon your death.
One of these strategies may apply to you if:
- You are between 55 and 65 years of age, working and not on a Transition to Retirement Pension;
- You want to borrow money in your superannuation fund;
- You have excess savings and you are not salary sacrificing into Superannuation;
- You are between 60 and 65 years of age and have recently changed jobs, or are about to;
- Your spouse is older than you and aged 50 or greater;
- You are aged 51 to 55 and are not utilising a pre-retirement strategy; or
- You are receiving an Account Based Pension and are over 60 years of age but younger than 75 and you are not drawing additional pension and re-contributing it back into your superannuation each year
Self Managed Superannuation Funds (SMSF)
A self-managed superannuation fund (SMSF) is your own superannuation fund where there are no more than four members, who all actively participate in the fund's management.
For people who want to have control of how their superannuation funds are invested, rather than relying on someone else to make their investment decisions, a Self Managed Super Fund (SMSF) is becoming an increasingly popular choice, making you responsible and the trustee of your own fund.
At AAS, we have Superannuation Specialist Advisors who can provide advice and assistance in helping you to set up your own SMSF, providing you with the control, flexibility and your own personal investment choice. You get to decide on your fund's investment strategy and choose what your fund invests in.
The various benefits of a SMSF structure include:
- Control - A SMSF will give you a greater degree of control over your superannuation investments. It affords a greater degree of investment flexibility as compared to the use of other superannuation vehicles, such as master trusts.
- Creditor Protection - Some assets (e.g. business property or some in-house assets) which are owned by the SMSF cannot be accessed by creditors of the fund members.
- Direct Property and Special Investments - Should you wish to do so, a SMSF allows you to hold direct property as well as specialist/unusual investments in it. You need to ensure however that your Trust Deed allows this.
- Borrowing Potential - A SMSF gives you the option of borrowing to invest, via a limited recourse loan structure. This can be used toward purchasing direct property or ASX listed investments.
- Lower Fees - Provided the SMSF maintains a sufficiently sized investment portfolio, there is the potential for substantially lower costs in the long term than investing through the use of public offer funds.
There are disadvantages as well, and these include:
- Set up costs
- Relatively high running costs where there are minimal member balances
- Additional time required to administer.