So what is Super anyway?
If your relying on your Superannuation for retirement, its important to understand exactly what a Super fund is all about.
We find that simplifying the Superannuation industry is the first place to start, as without this understanding, its difficult to know what options are available, and more importantly, what options are best for you and your retirement goals.
Think of a Super fund like money in a bucket, and different Super Funds, like different colour buckets.
Ultimately, a Super Funds job is to hold your Super for you, not make you money, and I’ll explain why in a moment.
Now, there are basically 2 phases with your Super:
1: Is the accumulation phase, which like it sounds, is when your making contributions, and hopefully making money. You have no access to your Super at this stage, and for most of us, very little control.
Now, most people think a Super funds job is to make you money, but this is incorrect, as a Super Funds only responsibility is to administer the fund, and make sure its paying its taxes, and run a yearly audit, which is what that yearly statement is all about.
And to prove it’s job is not to make you money, if you had 100K in a bank account, and the bank, who’s job is to keep your money safe, lost your money, you could take legal action and get it back, because they didn’t do their job.
Now after the GFC, people lost 10’s of millions in Super, some people almost all of it, and guess what happened to the Fund Manager’s who lost that money?
That’s right, nothing, because that’s not their job, but if they ATO found that you weren’t paying your taxes on your Super, what do you think would happen?
You guessed it.
From this simplified point of view, it’s clear to see that its more important that your paying taxes on your super, than it is that your Super Fund is making you money.
Now, that said, there are significant upsides to our Superannuation policies, as when you have money in Super, your only paying 15% tax on any money you make, and when you get to Pension stage, which is when you want to retire, you pay no tax on that income, as well as no Capital Gains Tax, so it really is your very own Tax Haven…but your Supers performance will be based on WHERE you money is invested, which we will cover in a moment
That brings us to the second stage of your Super, which is the pension phase.
The pension phase is the end game for most Australians.
Now if you’ve done everything right, your Super should support you in retirement, but do you know what the average couple will need for a comfortable retirement?
The Association of Superannuation Funds of Australia ASFA is the peak industry body representing all superannuation fund sectors, service providers and fund members.
They recommend that for a comfortable retirement, it would be appropriate to have funds equal to $43,000 P/A for a single person, and $59,000 for a couple.
This equates to $860,000 and $1,180,000 respectively.
So the question is, what percentage of people will ever have this when they retire?
According to the Bureau of Statistics, less than 5% have this amount waiting for them in retirement, and only 10% are able to self fund independent of their Super payout.
The remaining 90% are either forced to continue working into their 70’s, or retiring on a pension of just over $15,000 per annum.
When you look at these figures, and the shape of the Australian economy, its no surprise the government is looking for ways to up the taxes, up the Capital Gains taxes, and has made moves to hold back Super until we are almost into our 70’s.
OK, so that’s a bit about Super, now we’ll explain the iNetWorx program of Super Selection.
We have a panel of Super providers to choose from, and can make basic recommendations based on your desire top achieve the following:
1.) Do you know how much you need in retirement, and will your current Super funds performance get you there.
2.) Would you prefer your super to be invested in property, or assets exposed to global currency and stock markets.
3.) Do you want to be a number in amongst thousands of others, or would you prefer to have some say in the way your fund is managed through a Self managed Super Fund.
Once we have an understanding of what your preferences are, we look to our panel, and make a recommendation of a company who can steer you in the right direction.
From there, it’s a matter of lining your options up, matching them against your current Super balance and current contributions, and in doing so, maximising your opportunities to retire with not only the time we all crave, but also the funds necessary to continue to enjoy the lifestyle we’ve worked so hard for.