BOOMERS MARK BOURIS
THE first thing you have to know about your superannuation is that it’s your money. In fact, it’s income forgone in your earning years, that you can draw on for income when you retire.
Secondly, the super that everyone has heard of is the superannuation guarantee (SG), which requires an employer to put a percentage of your income into your super account. This is currently 9.5 per cent, but you are allowed to put more in as a contribution.
Contributions are well worth looking at: if you salary sacrifice the extra contributions over and above the SG, you are only taxed at 15 per cent. It’s a great incentive to save.
So is the tax rate you pay on the earnings in your super fund. It’s 15 per cent rather than the income tax you pay on investment earnings.
Another thing to focus on with super is returns and costs. The management costs of using a super fund manager can be anywhere from around 0.6 per cent of funds under management, to 2 per cent. A difference of 1 per cent in management fees can add up.
As for the returns, you want the money going into your super to compound and that means you want it earning good interest but with not too high a risk of going backwards. For most super members this means finding a balance between your risk profile, your age and stage, and your goals.
If in doubt about your super, and the options, you should see an adviser. It could make all the difference when you really need it. Mark Bouris is executive chairman of wealth management and advice firm Yellow Brick Road