Superannuation is an important part of life in Australia. For most people, it is their main source of retirement income. If you are just starting out in your career, or if you are nearing retirement age, it is important to understand the basics of superannuation. In this blog post, we will discuss the basics of superannuation and provide a beginner’s guide to getting started.
First, let’s define what superannuation is. Superannuation is a system set up by the government to help Australians save for retirement. It consists of compulsory contributions from employers and voluntary contributions from workers. These contributions are put into an account called a “super fund”, where it accumulates over time until it can be used for retirement benefits when you reach your preservation age (currently between 55 and 60 depending on your date of birth).
Next, let’s talk about how super works. The Australian Taxation Office (ATO) requires employers to make at least 9.5% of your salary each year in compulsory superannuation payments, known as the “Super Guarantee”. You can also choose to make additional voluntary contributions from your after-tax income. These can be made as a one-off or regular payment and are referred to as “concessional contributions”.
Your super fund holds your savings in an account, which is invested in assets such as shares, managed funds, and property depending on the risk profile you have chosen. The returns generated by these investments can grow at different rates depending on market conditions, so it pays to do research into the best type of investment for you. Over time, your investments will generate returns that increase the value of your super account. superannuation advisors southern highlands