Start a Super Saving Plan

SAVING

MORE IN YOUR

SUPER

Words Jacqueline Hodges

Every woman needs a savings plan, whether it’s for a weekend retreat, new pair of shoes, or your regular beauty maintenance. This is relatively easy for most women. We can plan the salon treatments and know just how much it will cost and when we have scheduled that appointment. Or for those of us with a young family, setting a kitty aside to realistically save for children’s school excursions, tuckshop, and those unexpected’ sporting accidents. We know they are going to happen but truly wish they wouldn't!

It is easy to live in the now and save for those short term events that we can think of in the present moment. It’s also easy to sit back and let our employer take responsibility for our super. Letting them be responsible for putting that super in each quarter or more often if you’re lucky. After all, we are not involved in that process.

For many women the only time she’ll think about her super is when she receives the annual statements showing how well or how poorly her superannuation account performed that year. But just as we save for that appointment, or event, we also need to be saving for our future, by creating a golden nest egg for our retirement. We grow that golden nest egg through our superannuation.

CONTRIBUTING TO SUPER

The overarching superannuation contribution types are concessional, non-concessional, and downsizer. Concessional contributions at taxed at the concessional rate of 15%. Nonconcessional and downsizer contributions at generally not taxed.

Concessional

• Employer super guarantee • Salary sacrifice

Voluntary Concessional

• First Home saver scheme • Personal contributions for which you claimed a tax deduction

Non Concessional

• Some employer contributions • Spouse contributions • Personal contributions for which you did not claim a tax deduction

Downsizer Contributions

• Up to $300,000 from the proceeds of selling your home for people over 65 years of age*

CONTRIBUTIONS CAPS

There are limits that cap the total contributions for which you can treat as concessional contributions or non-concessional contributions. This means you need to take into account these caps when planning to put more money into super.

Concessional $27,500 Non Conessional $110,000

HOW TO START A SUPER SAVINGS PLAN

If you would like to contribute more to super and build that golden nest egg, there are a number of ways to do so. But the essential place to start is what can you afford to do? Can you afford to reduce your income and put more into super? The best way to answer these questions is to look at your disposable income. That is the money you have left each month.

Total monthly income - your total monthly expenses = Your Disposable Income

Then think about how you use that disposable income now. Do you usually save the excess, do you spend the excess carefully, or does it just vanish?

Either way, if you do have disposable income, then you need to evaluate, if this money can be locked away in your super fund until you retire. Remember you may decide to only put aside a part of your disposable income into super and put some into savings outside of super for that raining day.

• Salary Sacrifice • First Home Owner's Super Saver (FHSS) • Voluntary contributions • Downsizer contributions

Let's look at some of your options:

SALARY SACRIFICE

You can arrange for your employer to pay all or part of your before-tax salary into your super account for you. These contributions are treated as employer contributions and count toward your concessional contributions cap.

Not only will you be creating wealth within your super fund, you may reduce the income tax you pay outside of super.

For tax salary sacrifice contributions are reportable employer super contributions, and will be added back in your tax return for certain calculations such as the private health fund rebate.

FIRST HOME OWNERS SAVING SCHEME

The First Home Owners Super Saving Scheme is available at any age, as long as you are over 18 years of age. This is a great option for young people trying to get into their first home or for older women who may not have held assets in their own name.

The main eligibility criteria is that you have never:

If you are looking to buy your first home you can make the following existing types of contributions towards the FHSS scheme:

• Owned any type of real property in

Australia • Owned a private company that invested in real property; and • You have not previously asked for a release of funds under the FHSS.

Voluntary Concessional

• Salary sacrifice amounts • Contributions for which a tax deduction has been claimed • Usually taxed at 15% in your fund

Voluntary Non Concessional

• After tax contributions • Contributions for which tax deduction has not been claimed • Usually not taxed in your fund VOLUNTARY CONTRIBUTIONS

Voluntary contributions are personal after tax contributions you make to your superannuation fund. You may choose to claim a deduction for your personal contributions. If you do, you can only top up your employer SGC up to the maximum of $27,500.

If you choose not to claim a deduction, then you may be able to contribution up to $100,000 as a non-concessional contribution each year.

DOWNSIZER CONTRIBUTIONS

From 1 July 2018, if you are 65 years old or older and meet the eligibility requirements, you may be able to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home. There is proposed legislation currently before Parliament to increase the downsizer to $600,000 and reduce the age limit to 60 years and older.

So rather than sit back in blissful ignorance knowing that your fund is growing, why not take an active approach, become interested in your financial wellbeing, and think about how to grow a bigger nest egg, be more involved, and enjoy a better retirement. By simply adding a little more to your fund each pay, you will find your retirement nest egg growing bigger.

Off course, how much of a difference that little bit extra increases your nest egg will depend on your age when you start your super savings plan. That little extra, won’t make much difference if you are about to retire but it will make a significant difference the earlier you start. If you need help with your super savings plan speak with a financial adviser.

DOWNSIZER REQUIREMENTS

You are 65 years or older when you make the downsizer contribution

This is the first time you are making a downsizer contribution

Your home is in Australia and is not a caravan, houseboat or other mobile home

You or your spouse owned your home for at least 10 years prior to the sale

Your home is your main residence and the proceeds from the sale are either exempt or partially exempt from capital gains tax

The amount you are contributing it from the proceeds of selling your home

You have provided your super fund with the Downsizer contribution into Super form either before or at the same time of making the downsizer contribution

You made your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement YES NO

Download this checklist at www.wfomag.co/downsizer_checklist

Disclaimer: The information contained in this article is general in nature and may not be relevant to your personal circumstance and needs. Taxation, legal and other matters referred to in this article are of a general nature only and are based on laws existing at the time and should not be relied upon in place of appropriate professional advice.

We recommend that you assess whether the information is appropriate to your needs and if appropriate speak with a financial adviser to discuss your needs, financial situation and investment objectives.

HQ Wealth Pty Ltd as trustee for HQ Wealth (CAR 1238791) and Jacqueline Hodges (AR 1238790) are Authorised Representatives of Wealth Today Pty Ltd (ABN 62 133 393 263), AFSL 340289.

Jacqueline

HODGES

Jacqueline Hodges is a Chartered Accountant, Registered Tax Agent and SMSF Auditor. She is a Financial Adviser and an authorised representative of Wealth Today. She has a wealth of experience having worked in the financial services sector for most of her career. Jacqueline is a firm believer in continuing education and holds a Bachelor of Commerce (UQ), a Master of Taxation (UM), and a Financial Planning Certificate. She established her own accounting firm servicing individuals and small businesses in 2005 and complemented the business in 2015 with the opening of the financial advice division.

We strongly believes in supporting women’s financial growth and created WFO, Hepburn, and Embrace magazines to fulfil this objective.

Jacqueline Hodges Managing Director HQ Tax HQWealth www.hqfinancialgroup.com.au 1300 474 829 LinkedIn