Superannuation changes

What do the proposed superannuation changes mean?

There has been much talk in the media lately about proposed changes to superannuation.

Not surprisingly it’s left a lot of us quite confused but it’s important to remember that nothing has been legislated yet so there’s no need for alarm.

So what does it all mean?

In a nutshell, the proposed superannuation changes will make it essential to start putting money away earlier.

This is due to reduced “caps” for example, the concessional cap that includes employer contributions and salary sacrifice will reduce from $35,000 to $25,000.

The end result of this decrease is that it will be harder to “catch up” later in life and enjoy the tax advantage that comes with lowering your marginal tax rate.

You’re likely to be most affected by this if you have or are planning to take a career break at some stage.

Some of the other changes will make it simpler to add to your super contributions and it has been suggested that anyone who does “top up” will be able to claim a tax deduction where previously, this only applied if you were self-employed.

It may also become easier to make spouse contributions but again, it’s important to wait and see how the changes look once they become law.

What must be remembered though is that super remains the most tax effective investment option for retirement savings.

Now is a great time to sit down with your financial planner and make sure your wealth management plan is working for you.

Topics to discuss should include the benefit of combining super savings with savings outside of your super if you want to retire early.

There are also constant changes to Centrelink and the Age pension which again, make it important to put away as much as you can before you retire so that you can live comfortably in your senior years.

And of course, with this comes the inevitable question of how much super do we need?

Well, there really is no magic number as needs and lifestyles vary from person to person.

However, having a well-considered superannuation plan that is mapped out and leaves nothing to chance means that not only are you in control but you can look forward to a long and stress-free retirement.