Most people dream about blissful retirement. After decades of long days and hard work, it’s only fitting that you spend the rest of your life in comfort and stability, surrounded by loved ones and a good home. For the Australians, this can be made possible through a super saver hero—the superannuation. It is a portion of income set aside, to be later accessed upon retirement.
There are a specific set of rules to follow, however, so it’s important to know more about superannuation. These rules have helped countless Australians attain the dream-like retirements, but certain complexities can make anyone doubt its importance.
To help you fully understand how the superannuation works, here is a quick guide for you. We talk about obligations, taxes, and contributions—let’s begin:
Understanding the accumulation phase
This period is paramount, as it is the first step to attaining the benefits of a superannuated life. This is the time where you continuously contribute to account, allowing your super balance to accumulate. Every cent you dedicate to this account will be locked away, to be preserved until your retirement. Your contributions are taxed up to the rates of 15%, provided that they are deemed as concessional.
Digging deep into the retirement area
Upon retirement, bear in mind that your super funds will still remain inaccessible. You must first commence a super income stream, which pertains to your retirement pension. Fund earnings on your assets can be transferred during this retirement area, and it can help support your pension stream. This is tax-free, but there is a cap of $1.6 million known as the transfer balance cap.
A Super Dive: What Else to Know
Is there a superannuation criterion I need to follow?
Not all Australians are entitled to the super funds. To gain access to this retirement benefit, you must fit the following items:
- You’re under 70 years of age
- You’re working full-time, part-time, or casual arrangements
- You’re paid over $450 before tax per month
Note: If you’re working under 18 years of age, your working hours should exceed more than 30 hours a week to qualify for the superannuation.
What happens if I am self-employed?
If you own a business, you are still entitled to contribute to superannuation. Self-employed individuals have the liberty to claim a full tax deduction for contributions, which can be an arrangement until the age of 75. The money you contribute is essentially invested by your respective super fund, which includes the following opportunities:
- Other investment products
Save and Contribute Now, Enjoy Life Later
Most countries exist without proper retirement investments, leaving individuals to seek retirement stability elsewhere. With the help of the superannuation, however, Australians are empowered to save up for their future.
While there are certain rules and regulations to follow, this is exactly what makes the program thrive—by following strict protocols, countless Australians have benefited from their years of hard work, allowing them to live comfortably despite the lack of income. All you need to do is to ensure that you meet the criteria and contribute regularly—by doing so, you create a financially stable life for yourself and your family.
If you wish to learn more about superannuation in Australia, Jubilee Financial can help. Our financial planners are dedicated to helping you reach the financial goals and stability you desire, regardless of your age and personal circumstances. We’ve been working with countless clients for the past 15 years, helping them attain their life goals. Allow us to help you achieve the same—reach out to us today.