In a country where residential property ownership is king, the importance of superannuation in financial planning can often be pushed into the background. Households – not to mention the media – can often become fixated on home ownership as the main way of generating wealth for retirement, but new research from the Association of Superannuation Funds of Australia (ASFA) has uncovered that super funds have a bigger role to play than a lot of people realise.
In the recently released report, titled Superannuation and the Economy, ASFA highlighted that compulsory superannuation has helped households mix up their assets, reducing risk and increasing returns. Not only that, but these factors have helped create a solid savings base for families, promoted economic stability and growth.
“The primary purpose of superannuation is to improve the retirement incomes of Australians, however, compulsory superannuation has had a number of positive effects for individuals and the economy,” said ASFA CEO Pauline Vamos.
In fact, the report points out that superannuation is already cutting down the cost of the age pension – and, in some cases, has helped retirees generate the equivalent to more than double the public pension.
Australians have a wide range of assets
Despite all the talk about rampant property investment in recent months, Ms Vamos underlined that superannuation has opened the door to whole raft of investment possibilities. While housing still plays a big role in household savings, Australians aren’t just relying on real estate and cash in a savings account to see them through to retirement as was the case some two decades ago. Instead, superannuation has injected some balance into the types of assets households hold.
“Today, through their superannuation, Australians are investing in a diversified range of assets, including domestic and overseas equities, fixed interest, infrastructure and commercial property,” Ms Vamos said.
What’s more, the tax arrangements around super are encouraging households to save for retirement. The Australian Taxation Office (ATO) taxes many contributions to your super, like mandatory employer contributions, at a reduced rate of just 15 per cent – this can offer a big incentive to put money into your fund, especially when compared to higher individual income tax rates.
With superannuation acting as the support pillar to your retirement savings, financial planning can make all the difference. To get you on the road to a comfortable life after work, make an appointment with a Bridges Financial Planner.
Police Bank for many years have chosen Bridges1 as our preferred Financial Planners. For more information about planning for you beneficiaries or any aspect of your financial position, we can arrange a complimentary, obligation free initial consultation near you. Call 131 728 or visit our Financial Planning page.