Superannuation: Use it or Lose it - Super contribution caps & concessions

Posted by Pacesetter Financial Services

If you are over 50 and moving closer to retirement, are you taking every opportunity to boost your retirement savings?

Your money will work harder for you when you take advantage of contribution tax concessions, but it’s not like the old days when large amounts could be contributed in the few years prior to retiring.

In the first instance, you can put to rest any unease about immediate changes of our superannuation system as the 2015 budget announcements confirmed a continuation of the existing contribution limits and taxation treatment of superannuation.

These limits or ‘caps’ need to be carefully considered. Under contribute and you could miss out on valuable tax advantages, contribute too much and you could risk penalties.

That is, for taxpayers over 50 years of age your concessional contribution cap is $35,000[1]. Unlike the ‘old days’ where large amounts could be contributed in the few years prior to retirement, you’ll now need to plan how much you can contribute and when. On average, people are waiting until they are just 7 years away from their retirement before they begin to seriously consider retirement planning.

It’s important to note that superannuation caps are annual.  Put simply, you need to use them or you’ll lose them.

The benefit of accumulating wealth in super is that it's a very tax effective means of preparing for retirement. There are other benefits as well, including the opportunity to draw tax-free income from your super fund if you are aged 60 or over and retired.

The end of the financial year will mark the end of the annual contribution cap period so it’s important for you to take action taken prior to June 30 particularly if you are self-employed.  Similarly, with the start of a new financial year pending, this can bring an opportunity for new or revised salary sacrificing arrangements for employees to take advantage of the caps in the year ahead.  

As you can see there are opportunities, and some limitations that need to be considered and for this you will need advice that is specific to your particular circumstances.  Here at Pacesetter Financial Services we have the expertise you need on superannuation related issues.

Call us on 07 3808 2808 for an assessment of your current superannuation position and let’s discuss the options available to you.