If you’re thinking the super rules have changed again, you’d be right. However, this time they’re a change for the better. From 1 July, the Government introduced a raft of new rules and changes to thresholds that will enable you to get more money into your super fund. In this article we consider ‘where to from here’ with your super.
If all of a sudden, retirement is looking a whole lot closer than you’d realised, and you’re now wondering if you’ll have enough to retire, or what do you need to change now to achieve the lifestyle of your choice, it might be time to make the most of the new rules.
From 1 July, 2021 the Employer Super Guarantee increased from 9.5% to 10%, the first of staged annual increases which eventually become 12% by 2025/26. What this means is your employer is now contributing more to super on your behalf. At the same time, the annual concessional (before tax) contribution cap increased to $27,500, up from $25,000.
For those who salary sacrifice, this provides opportunity for a further $2,500 to be added to your super savings each year. This has the double advantage of boosting your super balance while making the most of a lower tax environment. This could represent a significant tax saving, particularly for high earners who may be paying as much as 47% marginal tax.
In another welcome move, the non-concessional (after-tax) contribution cap has increased too. Up by $10,000, it’s now possible to contribute $110,000 per year of after tax monies to your super account. In turn, the three-year bring forward rule has also increased to $330,000 (up from $300,000). Each of these provisions apply so long as your super balance is equal to or less than $1.7 million (up from $1.6 million), otherwise extra tax or penalties may apply.
These new rules enable any surplus cash you may have as a result of extra savings, the sale of an asset such as a rental property, an inheritance or even a lucky lotto win to be contributed to super.
The government has also introduced super ‘stapling’ and, while not new, ‘catch-up’ contributions are also proving beneficial.
‘Stapling’ makes it easier for you to take your super with you when you change employers, which will help alleviate the problem of accumulating multiple default super funds.
Catch-up super contributions enable you to contribute any unused super cap amounts to your super fund for up to five years. This strategy is only available to those with a total super balance below $500,000.
The ability to contribute money to super from ‘downsizing’ your home is likely to become a more important planning strategy in the future and be relevant to both pre-retirees and those in retirement at any age. The recent Federal budget proposed to reduce the age at which the downsizer could be used from age 65 to age 60. If implemented this will open up more planning opportunities earlier.
These broad raft of changes highlight the increasing opportunities and flexibility there is available to build your future.
There are also a number of other matters affecting super that need to be considered too.
These include your age; your plans for both now and when you eventually do retire; your lifestyle expenses including your mortgage or debt situation; the timing of your contributions and indeed, the timing of your retirement; the balance of your super account; and of course, what you invest in once your money is in the super environment.
For many people, super is a ‘set and forget’ matter that requires little attention. That’s not the case for our clients. For many, super is, or will become, their second most valuable asset after their home. Our approach is to actively manage your superannuation strategies and investments, to make the most of taxation and other opportunities to help you achieve important long term goals.
We regularly talk to our clients about the role of super in achieving tax efficiencies now, as well as later in retirement. We also look to the future in terms of estate planning and the part super will play in the financial legacy you wish to leave your beneficiaries, and what needs to be done to make that happen.
These discussions are valuable and important for making the most of your lifestyle options, as well as how you can use your money to achieve what matters most, now and later. Super is important, and should be considered a key part of your financial big picture.
If your circumstances have changed or you find yourself thinking more often about how to make the most of your retirement, we invite you to consider these three important questions below and give us a call to talk through your answers.
1: When do you wish to retire?
2: How much money will you need in retirement? *
3: What can you do or change now to help make that retirement plan achievable?
* If you’re not sure, you may wish to review the Government’s SmartMoney  website or discuss with us in more detail.
To find out more about achieving the retirement lifestyle of your choice, and how we can help to you make it happen, please contact Brett Cribb, Steve Nicholas or James Marshall on +61 (0)7 3007 2007 or email email@example.com.
Stratus Financial Group helps professionals, executives, business owners, families and retirees manage their complex financial affairs and coordinate their professional advisers.
Stratus Financial Group and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306. This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances. You should also read the relevant Product Disclosure Statements (PDS) before making any financial decisions.