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This year’s Federal Budget foreshadowed the most dramatic reform of the superannuation system in over a decade, promising a simpler system with bigger incentives for super investors.
There’s been plenty of noise about the 2006 Federal Budget’s superannuation proposals. While most of the changes won’t kick in until July next year, I think people of all ages will benefit when they eventually do. I hope the changes inspire us all to take a more passionate view of our super.
It’s easier to get excited about something you understand and that gives us opportunities to make money, so we should take a more passionate view because the new rules will both simplify super and give us greater potential to achieve future wealth.
There’s no question the new super system will be much simpler with no tax applying to the majority of super payouts – that is, all payouts received after age 60. That removes the need to find ways of keeping your payout amount under tax-free thresholds and RBLs, and means your retirement savings should last for a longer period of time. There will also be more flexibility if you’re not ready to retire and want to continue building your retirement nest egg instead of dipping into it.
But what if retirement’s still years away? It’s true that the Government – or a future Government may change things again in the future, but that’s no excuse for complacency. As they say, it’s better to make hay while the sun shines and the sun will definitely be shining on super once the proposals go through. So it’s never been a better time to start saving in super and to be saving consistently. That’s been a proven way to create future wealth – whatever the rules governing super – and it’s truer now than ever.
Changes to the marginal tax rates also mean that most of us will have extra in our pay packets each week. Invest that tax saving in super and you may see a significant boost to your retirement funding, without noticing any effective difference at pay time. And if you’re eligible, you might get even more in the way of co-contributions.
Submissions on the proposals are currently being prepared and Russell is an active industry participant. We’re doing everything we can to ensure that the Government’s changes can be implemented smoothly and will indeed benefit all of our investors. Submissions close in August, so we’ll provide you with updates in future issues of Achieve.
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