The festive season is the busiest time of year for spending because of Christmas shopping, holidays and back to school expenses. However there are ways to offset the Christmas spend and increase your future savings suggested by REI Super.
Don’t waste any windfalls
Often when we receive a nice tax return, inheritance or bonus we tend to spend it on a treat for ourselves such as a holiday or shopping spree, because we didn’t plan to receive this money anyway.
REI Super chief executive Mal Smith said that allocating a percentage of the money to superannuation can leverage into a significant long term sum. For example a 25 year old can accumulate $175,000 by simply placing an extra $50 a month into super.
Salary sacrifice and take advantage of tax benefits
Salary sacrificing a portion of before tax income will allow us to accumulate more in their super, but also save by reducing their taxable income. When doing this Mr Smith said it is important to consider the contributions made by your employer to ensure you stay within the concessional tax limits.
Less than 5% of Australians under 45 contribute extra to their super according to data from the Association of Superannuation Funds of Australia (AFSA).
Keep one super fund
You may be automatically allocated a new super fund when you start a new job. This can result in you losing some of your existing benefits and you also may have to pay fees on multiple super accounts. Compare your new employers chosen fund with your existing fund and decide which one is best for you.
Make sure your employer is meeting their obligations
ASFA estimates that around $2.75 billion of compulsory super is not being paid by Australian employers. Mr Smith said it is important that you make sure that 9.5% of your before tax salary is going in every pay day. He also said that if they aren’t meeting their obligations you should talk to your employer to resolve the issue than contact the Australian Taxation Office (ATO).
Fund members earning less than $50,454 per annum may be eligible for the Federal Government’s co-contribution scheme. If so, making personal after-tax contributions to your super fund will attract up to $500 extra a year deposited by the Government.
Super contributions can continue when your older than 65, as long as you meet the work test. This means that if you are aged 65-75 you can make voluntary contributions if you’re at least gainfully employed on a part time basis. You must work for at least 40 hours in a period of no longer than 30 consecutive days.
Tim McIntyre, news.com.au
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This article is of a general nature and does not take into consideration anyone’s individual circumstances or objectives. Integrity One Planning Services Pty Ltd is a Corporate Authorised Representative No. 315000 of Integrity Financial Planners Pty Ltd ABN 71 069 537 855 (which is the holder of AFSL 225051). Integrity One Planning Services Pty Ltd and Integrity One Accounting and Business Advisory Services Pty Ltd are not liable for any financial loss resulting from decisions made based on this information. These articles are not owned by Integrity One Planning Services. We recommend that you seek personal advice from an advisor prior to implementing any of the information contained in this publication.