Are you overpaying superannuation tax? Find out how many Aussies are missing out on savings
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As we navigate the golden years of retirement, managing finances becomes more crucial than ever.
Superannuation is a key component of the retirement strategy for many Australian seniors, offering a nest egg to support them through their non-working years.
However, recent findings suggest that many retirees might be inadvertently diminishing their hard-earned savings by paying unnecessary taxes on their superannuation funds.
According to new research from the Super Members Council (SMC), around 700,000 Australians over 65 could be paying thousands of dollars in extra tax.
This is because they still have their super in an accumulation account rather than switching to a pension account.
This oversight could cost a retiree $100,000 in an accumulation account as much as $4,500 in taxes, a figure that could double for those with $200,000 saved.
When we consider that the average super balance for Australian men aged between 65-69 is $453,075 and $403,000 for women in the same age bracket, as reported by the ATO, the figures become clear.
The potential tax savings from making the switch to a pension account are even more apparent.
The SMC has expressed concern that many older Australians have not received the 'basic advice' necessary to transition their super into the tax-free retirement phase.
Misha Schubert, CEO of the Super Members Council, highlighted the importance of accessible information and advice, stating, 'Not knowing enough about super can lead to poor decisions, like leaving accounts inactive or withdrawing funds without proper planning.'
The council's research found that 39 per cent of retirees who leave their funds in the accumulation phase do so 'because they don't know what to do with it.'
This is a troubling statistic, especially considering that only 26 per cent of current retirees have sought financial advice from their super fund.
Moreover, four in five Australians aged 45 to 54 acknowledge the need for advice but find it unaffordable.
The good news is that the Australian government's financial advice reforms, part of Labor's 'Delivering Better Financial Outcomes' package, aim to bridge this knowledge gap.
Although the package still awaits legislation, it promises to ensure access to quality and affordable financial advice for all Australians.
It also proposes to empower super funds to provide better guidance to members at critical life stages with personalised prompts to support retirement planning.
To optimise your superannuation, review your account type to check if it's in an accumulation or pension account.
Seek professional advice from a financial advisor to understand the best options for your situation.
Stay informed about the latest government reforms and how they might benefit your retirement planning.
Finally, contact your super fund to inquire about switching to a pension account and any other advice they can offer to help you make the most of your super.
If you've had experiences managing your superannuation or have tips to share with fellow retirees, we'd love to hear from you in the comments below. Let's help each other make the most of our retirement savings!
Superannuation is a key component of the retirement strategy for many Australian seniors, offering a nest egg to support them through their non-working years.
However, recent findings suggest that many retirees might be inadvertently diminishing their hard-earned savings by paying unnecessary taxes on their superannuation funds.
According to new research from the Super Members Council (SMC), around 700,000 Australians over 65 could be paying thousands of dollars in extra tax.
This is because they still have their super in an accumulation account rather than switching to a pension account.
Research revealed that around 700,000 retired Australians over 65 may be paying unnecessary taxes on their superannuation. Credit: pinkomelet / iStock
This oversight could cost a retiree $100,000 in an accumulation account as much as $4,500 in taxes, a figure that could double for those with $200,000 saved.
When we consider that the average super balance for Australian men aged between 65-69 is $453,075 and $403,000 for women in the same age bracket, as reported by the ATO, the figures become clear.
The potential tax savings from making the switch to a pension account are even more apparent.
The SMC has expressed concern that many older Australians have not received the 'basic advice' necessary to transition their super into the tax-free retirement phase.
Misha Schubert, CEO of the Super Members Council, highlighted the importance of accessible information and advice, stating, 'Not knowing enough about super can lead to poor decisions, like leaving accounts inactive or withdrawing funds without proper planning.'
The council's research found that 39 per cent of retirees who leave their funds in the accumulation phase do so 'because they don't know what to do with it.'
This is a troubling statistic, especially considering that only 26 per cent of current retirees have sought financial advice from their super fund.
Moreover, four in five Australians aged 45 to 54 acknowledge the need for advice but find it unaffordable.
The good news is that the Australian government's financial advice reforms, part of Labor's 'Delivering Better Financial Outcomes' package, aim to bridge this knowledge gap.
Although the package still awaits legislation, it promises to ensure access to quality and affordable financial advice for all Australians.
It also proposes to empower super funds to provide better guidance to members at critical life stages with personalised prompts to support retirement planning.
Dear members, it's time to take action and ensure you're not among the many retirees overpaying tax on your superannuation. Here are some steps you can take:To optimise your superannuation, review your account type to check if it's in an accumulation or pension account.
Seek professional advice from a financial advisor to understand the best options for your situation.
Stay informed about the latest government reforms and how they might benefit your retirement planning.
Finally, contact your super fund to inquire about switching to a pension account and any other advice they can offer to help you make the most of your super.
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