Retirement is not all but at least a good deal about how you manage your Superannuation. Even if the accumulation phase of a Super looks tardy, it is well compensated by the pension phase when the fund actually begins to deliver the goods.
The beauty of the pension phase
It is interesting to note that any income stream derived from the Super during its pension phase is bereft of a great degree of tax. In fact, it is entirely tax-free if you happen to be above 60 years of age. Both the pre-tax ‘concessional’ contribution and the after-tax ‘non-concessional’ contribution have the sole aim of bringing you face to face with the attractive Super-investment environment.
Salary sacrifices
If your employer does not object to the agreement, you can have a pre-stipulated part of your salary sacrificed. This not only enhances your Superannuation balance, but also shifts the contributed amount to a 15% tax slab from an exorbitant 46.5%.
Retirement nest egg frugal but government keen
In Australia, the government is pretty keen on measures that help with retirement savings. It is another thing that most of the retirees do not have even close to substantial income to sustain themselves. Women, owing to their larger life expectancy, fare even worse than men. To come back, the government, in its bid to boost the retirement kitty comes up with ideas that include, but are not limited to, Low Income Tax Offset, Commonwealth Seniors Health Card, Age Pension and Senior Australians Pensioner, and Tax Offset.
Manage your debts well
Your family home or the principal place of residence is exempt from capital gains tax when you decide to sell it, but this is where the dig stops. Many other expenses, like home renovations and leveraging equity for refinancing must be done in a tax-effective way. It is crucial to keep a tab on your level of debt. This warrants a thorough assessment of tax rates that apply to you, understanding of the structure of prevailing debt and the kind of interest you have to pay.
Diversify asset
Before wrapping, I can never overstate the importance of diversifying your asset into growth and income generating ones. A mix of bonds, shares, and property can do the trick.
What kind of an investment portfolio do you have for a smooth retirement in the future?
