AMP has shared with us this video that will talk you through your building for retirement strategy. You can watch the video here or read the transcription below.
Hi. My name is Chris and I’ve been with AMP for around 14 years. For most people super is a set and forget thing. Their employer pays some of their income into it for them and they get a statement once a year. It’s not touchy-feely. Because legislation seems to change all the time, it all starts to get too complicated, so most people file the whole thing under “too hard”. But it really pays to give your super some serious thought, especially if you’re 10 to 15 years off your retirement age. It’s worth thinking about the building for retirement strategy.
The building for retirement strategy is a way you may be able to use your super to reduce your tax and either build more wealth so you can live your ideal retirement or help you move into part-time work or semi-retirement, which means you could be working less without necessarily reducing your take home pay. To use this strategy, you need to have reached your preservation age, which is the age you can start accessing your super. For those born before the 1st of July 1960, your preservation age is 55. For those born after this date preservation age can be up to age 60.
The building for retirement strategy lets you draw an income from your super while you’re still working. Then, you can start salary sacrificing some of your pay back into your super. In effect, what you’re doing is swapping the income you get from your employer with an income from your super. The benefit of this is that income you get from your super may be taxed at a lower rate. If you were simply receiving an income from a job or business, you’d be paying up to 46.5% tax. Whereas, income you get from your super receives a 15% tax rebate if you’re between the ages of 55 and 60. Then, once you’re over age 60, it’s completely tax free, so it’s really worth thinking about.
There are some limits on how much you can contribute to your super and those limits may vary depending on how much money you have in your super in your age. Obviously, the more you salary sacrifice into super or top it up with additional contributions, the more money you could have for your retirement. This doesn’t take into account your situation, so you’ll need to consider your own circumstances before making any investment decisions. That’s another great reason you should speak with your financial planner to make sure you have the right investment mix for what you need, but don’t be put off by the complexities because actually the time before retirement gives you plenty of opportunities. In fact, the building for retirement strategy lets you do one of three things, one, you may be able to reduce your tax while increasing your super balance; or two, you may be able to use it to help you move into part-time retirement by working less or as retaining the same income; or three, it could be also used to help pump up your income and help pay off your mortgage and own your house a bit quicker.
There are a number of different “building for retirement” strategies that are worth talking over with your financial planner. Once I got to understand them, I saw that building a super before retirement isn’t about complexity, it’s all about opportunity.