How to avoid the Superannuation Savings Gap

It’s been all over the news for a good while: Australia’s ageing population faces a huge savings gap for retirement. A Rice Warner Actuaries study put the total deficit in the neighbourhood of a staggering $1 trillion, and anyone who relies exclusively on compulsory super contributions is likely to contribute to this statistic.

With the benchmark being a relatively ordinary “comfortable retirement”, this discrepancy will translate into quite adverse lifestyle changes for those affected. But there are ways to avoid becoming one of these statistics:

      1. Target-setting

        Of course, the key to securing a truly comfortable retirement is knowing how much it will cost, yet research indicates that 68% of Australians are unaware of this. We help you calculate what it will cost to maintain the lifestyle you desire and set the targets required to achieve this.

      2. Additional super contributions

        This may seem straightforward, but there are very detailed rules in place regarding who can contribute and how much can be contributed, plus how contributions are to be taxed. Broadly, contributions can be made either:

        Before tax (concessional contributions) which include employer or “Superannuation Guarantee” at the current legislated rate of 10%pa, salary sacrifice or personal contributions which are eligible for a personal tax deduction; or

        After tax (non-concessional contributions) which include Government Co-Contributions, Spouse Contributions and also personal non-concessional contributions.

        Concessional and non-concessional contributions are subject to different contribution caps and other eligibility requirements. This can result in a complex and difficult landscape to navigate when you are trying to do it alone. Drawing on our deep knowledge of the relevant legislation, we can provide you with a customised superannuation plan that capitalises on all available opportunities.

      3. Transition into retirement

        If you are of “preservation age”, we can advise you on how to swap super contributions through salary sacrifice for a partial pre-retirement pension; a tax-effective method that can make a real difference to your total savings at retirement.

      4. Consolidation of funds

        Modern Australians typically change jobs 11 times, often forgetting superannuation accounts when they move on to the next opportunity. If left unchecked, these accounts can become diminished by fees and charges over time. We can assist in locating and consolidating forgotten super into a single account, maximising your savings power.

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