There are some superannuation strategies that are better suited to people at a particular age or stage in their life, an accountant, and business and financial advice firm believes.
The limit on super contributions mean people need to start maximising their contributions much earlier in life for a comfortable retirement, according to HLB Mann Judd Sydney’s wealth management partner, Jonathan Philpot.
Philpot said those in their 20s and 30s need to seek to maximise the growth potential of their super through growth or high-growth investment options.
“This age group can afford to ride out short-term market volatility and take advantage of the fact that over time — particularly a thirty or forty year period — the overall trend of markets is almost inevitably upwards,” he said.
“Keeping super in one place can make a significant difference to the final balance at retirement, due to minimising the level of fees and being able to track and manage one account rather than multiple accounts.”
For people in their 30s who have depends Philpot said need to consider appropriate life insurance within super, as it is a tax-effective way to hold insurance.
Philpot also noted it may also be worthwhile to look at spousal contributions if one partner earns less than $13,800 a year.
Philpot said people in their 40s may be in a position to consider strategies such as salary sacrifice to build up their balance as they are in the peak of their earning capacity, and particularly if they have made good headway on a mortgage.
“It’s therefore a good time to start thinking about using salary sacrifice to boost their concessional contributions up to their $30,000 annual limit,” he said.
“As a rule of thumb, this is a worthwhile strategy if their salary level is over $100,000 and the home mortgage is less than 50 per cent of the property’s value.”
Those in the 50 to 65 age bracket should think about what kind of income level they want in retirement and to check if their balance is on track to meet this.
“A sustainable annual income should be no more than five per cent of the superannuation balance… and plan non-concessional contributions to get large amounts into superannuation before age 65,” Philpot said.
From age 60 people should consider ‘transition to retirement’ strategies as any income earned on superannuation assets becomes tax-free when transitioned into a pension.
