Super Choice
On July 1 2005 the Government introduced new ‘choice’ regulations which allow most employees to choose where to invest their compulsory super contributions.
Although you don’t have to make a choice, if you do want to select which fund your employer contributes to, take some time and tread carefully.
The super difference
Tax benefits available to you, both when you contribute to super and in accessing it when you retire, can make a dramatic impact how long your money will last in retirement. Put simply, these benefits mean that money invested in super can last over 13 years longer for you in retirement than if it was invested in the same way, outside super.
When to think seriously about your super
As this example highlights, there are real benefits available to you by investing in super. It is important to remember that generally speaking, any contributions you make to your super fund are ‘preserved’ (that is, you can not withdraw them) until your retirement age. There are some exceptions to this, but essentially the rules have been designed to make you keep you money in super until you reach retirement age (generally 55-60). The specific age at which you can retire and access your money depends on your date of birth (see table below), however, anyone under the age of 36 in 2002 will have their super contributions preserved in their super fund until they are at least 60 years old and retired.
It is therefore very important that before you invest in super, you consider your financial needs for the short, medium and long term. It is normally not advisable for investors under 35 to contribute over their employer contributions into super, as it is quite likely that you will need to access money sometime soon to meet your life’s expenses. On the other hand, investors aged 45 and older can find super a very attractive investment option. Make sure you discuss these issues with your financial adviser to find out when you should start to make additional contributions to your super and what specific strategy will best meet your needs.
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It is therefore essential that before you invest in super, you consider your financial needs for the short, medium and long term. Make sure you discuss these issues with your financial adviser to find out when you should start to make additional contributions to your super and what specific strategy will best meet your needs.
Investor Tip
Tax benefits mean that money invested in super can last over 13 years longer for you in retirement than if it was invested in the same way, outside super.
