Strategic planning to maximise retirement income
Superannuation is a key investment area designed to aid in meeting your retirement income needs.
Unfortunately, many don’t understand their current investments, what they are actually invested in, the fees involved, and the constant regulatory and legislative changes that occur over time that may impact them individually.
Maximising efficiency, and understanding in this area can positively impact your retirement lifestyle and enable longevity in finances.
Our diverse range of retail super products and Self-Managed Super Funds allow clients to gain an increased level of control over their superannuation savings.
Investments such as direct shares listed on the Australian and international stock exchanges, property, interest bearing investments and managed funds can all be held within your superannuation portfolio.
Oracle Advisory Group can help you understand:
- Investment risk profile analysis
- Ideal returns with a low level of risk
- Investment platforms and underlying investments analysis
- Salary sacrifice and salary packaging
- Superannuation contributions including employer contributions and non-concessional (after tax) contributions
At Oracle Advisory Group we specialise in analysing your current superannuation provider and advising the best outcomes for you based on your specific needs, with the aim of making this investment area achieve superior returns with lower risk and to be tax effective into the future.
Our complimentary initial strategy session will help you to understand the many opportunities and pitfalls that exist and assist you in organising a superannuation strategy for the years ahead.
Frequently Asked Questions
The Australian and Securities Investment Commission (ASIC) estimate that by the age of 65, a single person who wants a ‘modest’ retirement lifestyle (with annual living costs of $23,032), would need a lump sum of $300,000 (in today’s money).
For what ASIC calls a ‘comfortable’ retirement lifestyle (with annual living costs of $41,830), you’ll need a lump sum of $544,000 by the age of 65.
Couples will need a lump sum of $431,000 for a ‘modest’ retirement and $744,000 for a ‘comfortable’ retirement.
If you change jobs regularly, you may find that you have multiple super fund accounts. When you leave your job for a new position somewhere else, you can:
- Leave your super invested in the fund currently owned and arrange your employer to forward super payments to this
- Alternatively, rollover your money from your existing superannuation fund to your new one.
This can be beneficial because it makes it easier to manage and monitor the one fund instead of having multiple funds and will save management and investment fees.
Remember that whether you stay in one job all your life or change jobs on a regular basis over the years, managing your superannuation is essential to maximise its long-term benefits.
Super is designed to fund your retirement cash flow needs, and therefore the preserved funds are not accessible until you turn 65 or reach preservation age and retire. However, there are certain circumstances that may enable you to take your preserved funds out of your super.
- Severe financial hardship
- Reaching preservation age (see below table)
- Via a Transition to Retirement strategy
SMSFs have been a popular way to take control of superannuation investments and make better use of the money.
However, there are many pros and cons with this strategy. Running an SMSF is just like running a business and requires all the same focuses to be effective and compliant.
Its best to get financial advice prior to starting anything. Here’s a list of just a few of the things to be aware of and some of the associated costs:
- Become the Trustee of the fund, either as an individual or corporate entity, and therefore make all decisions regarding investments
- Formulate an investment strategy and review this regularly
- Understand the restrictions regarding investment types an SMSF can make
- Fund the setup and licencing of the fund, via existing super funds available
- Pay for independent audits of the fund annually
- Keep the fund legally compliant otherwise fines to the trustees can be significant
Once set up, you must prepare:
- SMSF annual tax return
- Valuations of the SMSF’s assets
- Actuarial certificates for SMSFs paying income streams (pensions)
- Attain the services of a financial advisor
- Pay ongoing legal fees, for example if the trust deed needs to be amended
- Gain assistance with fund administration
- Put in place personal insurance for all members
Oracle Advisory Group can assist in the management of an SMSF so you can focus on what is important to you. We will also advise whether an SMSF is the right strategy for you.
In most cases, yes. Superannuation in Australia is generally taxed at three stages: contributions, investment returns and benefit payments.
As an employee, you can contribute up to $25,000 to super, including your employer’s required 9.5% super contribution. These payments are taxed at the rate of 15%, which is much lower than most people’s taxation rate on income. Note that if you are self-employed, you can claim a full tax deduction for superannuation contributions until you reach the age of 75.
As always, there are certain exceptions to consider:
- If you earn under $37,000, tax will be reimbursed into your super fund via the low-income super tax offset
- If your income and super contributions together sum over $250,000, you must also pay Division 293 tax at a rate of 15%
- If you make non-concessional contributions from after-tax income, then you are not required to pay contributions tax
Investment income generated by super funds is also taxed at 15%. This pertains to interest and dividends, minus tax deductions and credits.
The amount of tax you pay on superannuation withdrawal varies according to whether it is in the form of a super income stream, lump sum or super death benefit.