Thank you for the video. Question: I recently watched a You Tube video from a financial planner who recommended taking Super at 60 rather than later ( eg 65 ) because the balance becomes tax free once in pension phase. Concessional contributions are ok until 67, so is it a thing that Aussies can do to reduce tax and still contribute back in the accumulation side?
Pension phase of super accounts have 0% tax rates on capital gains and investment income but you have to draw minimum percentage based on your age as tax free non assessable income. You can then, if you have taxable income, make a concessional contribution to super and claim it as a tax deduction against your taxable income. Eg you taxable income is 32% tax rate, you can get a tax deduction for the difference in super, 32% - 15% = 17% tax benefit. You can do this up until age 67 where you must then meet the work test until age 75 where you can no longer make tax deductible contributions but can make non concessional contributions. This does not apply to employer super guarantee Further reading is super recontribution strategies or speak to a qualified financial adviser 👍
Because no-one knows how long they will live, it is usually best to retire as early as you can once you have met your wealth target and (ideally) maximised the tax benefits of the superannuation system. Unless, of course, you are a workaholic or otherwise find working better than not working. IF you are already 60 and don't have your super in tax-free pension phase because you have not met a condition of release by ceasing "an" employment relationship, simply take on a gig economy job for a week, then quit it and you will be sweet, while keeping your main job.
Congratulations Shani - wonderful news on your promotion!! Guys - good to hear your reflections on social equity - a necessity for a fair, safe and a socially cohesive Australia. The “incentive disparity” is a concept policy makers need to get their head around. I say, help those more that need support (not takeaway food) without putting disincentives in at the top (caps are ok - but proposed $3m is too low without indexation). Love your work as aways - thanks so much!! Tim (from TAS!)
It's misleading to suggest that those who withdrew the maximum allowed from their superannuation during the pandemic will be $120k less wealthy on retirement. That's regurgitation of the marketing spin from the super funds that seek to continue to maximally clip the ticket of FUM. Who's to say what people used those funds for or whether they will make catch-up contributions at some later time? Also, it is likely that those who did withdraw the maximum were not the wealthy. More likely, they were mainly those who will rely on the aged pension to some degree. If their balance on retirement is lower due to an earlier withdrawal, they would likely get a higher pension.
A question on the student loans balance. If the person doesn’t reach the gross income point to start making payments, do interest accumulate and increase the initial balance overtime?
Super is unfair, because if you know how to save for retirement and at the end of the day you wont get pension if you are above threshold. Unfair. And those people who YOLO and saved nothing get pension. Unfair.
What has fairness got to do with it? Australia long ago ceased to believe in fairness, egalitarianism or the "fair go" as we used to call it. Every man for himself and his family. Leverage the system where you can and keep on top of ever changing rules.
Congratulations on the promotion. I just got one as well. More towards my ETFs post tax.
Labor is coming after your super
Thank you for the video. Question: I recently watched a You Tube video from a financial planner who recommended taking Super at 60 rather than later ( eg 65 ) because the balance becomes tax free once in pension phase. Concessional contributions are ok until 67, so is it a thing that Aussies can do to reduce tax and still contribute back in the accumulation side?
Pension phase of super accounts have 0% tax rates on capital gains and investment income but you have to draw minimum percentage based on your age as tax free non assessable income. You can then, if you have taxable income, make a concessional contribution to super and claim it as a tax deduction against your taxable income. Eg you taxable income is 32% tax rate, you can get a tax deduction for the difference in super, 32% - 15% = 17% tax benefit.
You can do this up until age 67 where you must then meet the work test until age 75 where you can no longer make tax deductible contributions but can make non concessional contributions. This does not apply to employer super guarantee
Further reading is super recontribution strategies or speak to a qualified financial adviser 👍
Because no-one knows how long they will live, it is usually best to retire as early as you can once you have met your wealth target and (ideally) maximised the tax benefits of the superannuation system. Unless, of course, you are a workaholic or otherwise find working better than not working. IF you are already 60 and don't have your super in tax-free pension phase because you have not met a condition of release by ceasing "an" employment relationship, simply take on a gig economy job for a week, then quit it and you will be sweet, while keeping your main job.
Congratulations Shani - wonderful news on your promotion!! Guys - good to hear your reflections on social equity - a necessity for a fair, safe and a socially cohesive Australia. The “incentive disparity” is a concept policy makers need to get their head around. I say, help those more that need support (not takeaway food) without putting disincentives in at the top (caps are ok - but proposed $3m is too low without indexation). Love your work as aways - thanks so much!! Tim (from TAS!)
7:17 - Lets be accurate, there is a 1% incentive + 2% medicare levy for a total of 3% Incentive to contribute to super. Correct?
No. Super is taxed at 15%, income is taxed at your marginal rate. So 30,37 or 45% (most likely)
It's misleading to suggest that those who withdrew the maximum allowed from their superannuation during the pandemic will be $120k less wealthy on retirement. That's regurgitation of the marketing spin from the super funds that seek to continue to maximally clip the ticket of FUM. Who's to say what people used those funds for or whether they will make catch-up contributions at some later time? Also, it is likely that those who did withdraw the maximum were not the wealthy. More likely, they were mainly those who will rely on the aged pension to some degree. If their balance on retirement is lower due to an earlier withdrawal, they would likely get a higher pension.
A question on the student loans balance. If the person doesn’t reach the gross income point to start making payments, do interest accumulate and increase the initial balance overtime?
60 billions in fees p.a. >>> plus gov Taxes... Waste of investment... Compare to 0 taxes investment
Albo wants everyones super to build wind farms
Super is unfair, because if you know how to save for retirement and at the end of the day you wont get pension if you are above threshold. Unfair. And those people who YOLO and saved nothing get pension. Unfair.
Pension is lacking. I'd rather set myself up.
What has fairness got to do with it? Australia long ago ceased to believe in fairness, egalitarianism or the "fair go" as we used to call it. Every man for himself and his family. Leverage the system where you can and keep on top of ever changing rules.