The clearest advantages of investing in super are the tax concessions that are available. For this reason, it can be a more attractive option than other types of investments. In addition, income received from super may be assessed more favourably by Centrelink than assets held outside of super, potentially resulting in increased entitlements.
An effective way to take advantage of super's tax concessions is through salary sacrifice. Compared to making contributions from your after-tax income (for example, to a savings account or managed fund), salary sacrifice has three main benefits:
You'll have more money to invest: your salary is taxed up to 49% (depending on your marginal tax rate), while a salary sacrifice contribution is taxed a maximum of only 15%.
You'll pay less tax on earnings: earnings on your savings or managed fund may be taxed up to 49%, while earnings on GESB Super are only taxed at 15% (West State Super and Gold State Super are untaxed funds and therefore tax is paid once you access your benefit).
You'll reduce your income tax: making salary sacrifice contributions reduces your taxable income, and therefore you may pay less income tax.
The benefits of salary sacrifice can be further enhanced after you reach your Commonwealth preservation age1, when you can begin a Transition to Retirement (TTR) strategy and continue working. You can salary sacrifice to super while drawing on your benefit through a retirement income stream - thereby growing your super without reducing your income.
As you approach retirement you may want to revisit your investment plan. A conservative plan may be limiting the potential growth of your super.
Consider your timeframe until retirement, and also keep in mind how long you may live after you retire. According to the Australian Securities and Investments Commission, retired women can expect to live to 90 and retired men can expect to live to 86. That means your investment timeframe in retirement (for some of your super) could be up to 30 years - and you could afford a more aggressive plan than you initially thought.
Even if they are small regular deposits or lump sums, extra contributions over a sustained period can make a big difference to your final super balance. As you approach retirement you should aim to make the maximum amount of contributions possible.
There are limits on the amount of contributions you can make to super, and they change depending on which type of GESB account you hold. For more information, including salary sacrifice and the Commonwealth Government Super Co-contribution, visit the grow your super page.
If you have more than one super account, there are benefits in having them all in one place. You'll save on fees, and you'll be able to see the performance of your super, and what it is invested in, on one statement. Read more about rolling in to GESB.
Whatever life stage you're at, there may be times when you need a little help with your super.
Whether you're starting out, nearing retirement, or just looking for some general advice, GESB has a range of products and services to suit your individual needs. Find out more.
GESB's services, however, are limited and general in nature and largely confined to assistance with your GESB super interests. They don't take into account your complete personal financial objectives, situation or needs.