A Beginner’s Guide to Understanding the Basics of Superannuation
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A Beginner’s Guide to Understanding the Basics of Superannuation

As an Australian, Superannuation is one of the most important financial assets that we own. Your superannuation might just be the key to a comfortable life in the future.

So how does it all work, when will you need it, and what do you need to do with it? Keep reading for all the answers you need to know about your all-important super fund.

What is Superannuation?

Superannuation is money put aside during your working years so that you can use it to fund your retirement. In Australia, your employer contributes to your superannuation: the amount they contribute is called the Superannuation Guarantee.

Your super fund invests your money on your behalf so that it can grow and secure your money. What’s more, is that you have the opportunity to also contribute money to your super fund yourself so that you can use it for your dream retirement.

How Do I Save Super?

For most people, your employer pays money, which acts as your contribution, into your super account for you. They pay these contributions as part of your working salary.

Employers are required by law to contribute at least 10% of each employee’s earnings into their superannuation fund. What’s great about a super is that you will generally pay less tax on your money in a super fund than the money you earn outside of super.

Are There Requirements to be Eligible for a Super Fund?

Generally, your employer must pay super if you are:

  • 18 years old and above
  • You get paid $450 or more before taxes in a calendar month
  • Under 18 years of age, being paid $450 or more and work more than 30 hours a week

These are the most basic requirements of superannuation, and it applies whether you work casual, part-time, or full-time hours, and also if you’re a temporary resident. You may also be eligible if you are a contractor who is paid primarily for labour, even if you have an Australian Business Number (ABN).

How can I Add to my Super Fund?

You can grow your super balance by making extra, voluntary payments. Even small amounts add up over time, and voluntary contributions can even reduce the amount of tax you have to pay.

It’s important to know that there are limits to the amount of super you can contribute as well as regulations around contributing. You may like to discuss with a financial planner what the best options are for you to prepare your super for retirement.

Here are some of the super contributions you can make:

  • Pre-tax super contributions (salary sacrifice)
  • After-tax super contributions
  • Government co-contributions
  • Spouse contributions
  • Downsizing Contributions

Your super is one of the most important sources of money you’ll have in the future. While you can’t access it before you’ve reached your preservation age, if you make smart decisions with it now, you may minimise your tax and you will thank yourself in the long run.

Coastal Advice Port Macquarie is here to help you achieve your dream retirement through our personalised financial advice. We understand how important it is for retirees to enjoy a relaxing and rewarding lifestyle free from any financial worries.

If you need help getting your superannuation or retirement planning in order, our superannuation advisers in Australia are always available to assist you. Book a complimentary consultation with us today!

 

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.
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