Your Retirement Income Funds.
You have worked for 50 years and now you have decided its time to retire. All those years you have been contributing to a super fund and now you can finally realize on it and do all the things you had planned.
Superannuation, or super, is money you put aside during your working life to use in retirement.
When it’s time to access your super, you should consider your options to work out what’s best for you. Your choices could affect how comfortably you live in your retirement.
See the table below put out by the Commonwealth Bank of Australia.
.This table outlines the amount of money you require to live comfortably for 20 years after retirement.
Appointing An Enduring Power of Attorney
Recently the Australian Law Reform has cited a concern about elder abuse in relation to Self managed Super Funds. Consequently, a National Legal Response team recommended that an enduring Power of attorney be encouraged and appointed and that the tax office be kept
If you have not reached retirement yet it would be a wise move to appoint someone you trust to act as an enduring power of attorney. It is imperative that the person nominated for this role would make decisions in your best interest.
Appointing an Enduring Power of Attorney is to ensure that should you lose the capacity to make wise and rational financial decisions for whatever reason you will have someone who is legally able to act on your behalf and take over the management of your self managed super fund. They will assume responsibility for signing and returning tax returns and the financial statements for the super fund. They will also be able to manage your share trading and any other assets listed in the super fund.
It also recommended that you leave written instructions outlining your wishes for the administration of your super savings. Introduce them to your accountant and financial advisers so that they will feel comfortable working with each other should the need arise.
Having an Enduring power of attorney is part of a good estate plan which should give you peace of mind as they work in your stead and your best interest when you are no longer able to do it for yourself..
Be Aware. : Read the Deed:
A superannuation trust deed is a legal document and can be complex to read as is most legal jargon. Seek the advice of your financial adviser to get clarification to ensure you are compliant with the current tax laws relating to super funds as they can change over time. Make sure the deed is kept up to date and amend it accordingly. If you are an Australian Retiree you need to be reviewing your Self Managed Super Fund now to ensure it complies with the new tax rules introduced by the Australian Tax office on 17th July this year. Do get clarification on this as the Tax Office restricts the amount of money which can be kept in super after the death of a member. It may mean the residual funds may die with them, so you need to ensure you have good advice and are covered for this scenario.
How is Super Taxed?
Super is taxed at three different stages
1. When super goes into your account
2. From the investment earnings before they are added to your account
3. When you withdraw money from your account
When super goes into your account: The money you put into super can be paid in two main ways –before you pay tax on it and after tax is deducted from it.
Before tax (also called concessional contributions) These include:
■ employer contributions (including Superannuation Guarantee)
■ salary sacrifice contributions
■ contributions you split with your spouse
■ personal contributions you have claimed a tax deduction for.
After tax (also called non-concessional contributions) These are personal contributions you make (e.g. from your
after-tax salary) that you have not claimed a tax deduction for.
When Can You Access Your Super?
Super benefits are subject to rules to protect your entitlements.
Preservation rules prevent you from accessing your benefits until you satisfy those requirements.
Once you reach your preservation age you can choose to receive a transition to retirement income stream.
This enables you to receive regular payments (an income stream) from your super while you continue working. Each financial year you can access up to 10% of the money in your super account at the start of the financial year.
Seek independent financial advice to help you decide if a transition to retirement income stream is right for you.
Please Note the information above is relating to the Australian Tax system and you should check with your financial adviser to understand the implications of accessing your super within your country of residence.
If you find you need a little extra in your super then try working with us at Wealthy Affiliate.