Make the most of your super

When considering which investment is right for you, there are three major things to be aware of:

• the different types of investments and how they perform
• the relationship between risk and return
• and why diversification is essential for a sound investment strategy

Another important thing to consider is the investment environment that is most appropriate when investing to meet your retirement goals.

These days we are living longer. Many people dream about retiring early and enjoying more leisure time over a longer period.

With Australia's aging population putting ever increasing strain on our social security system, in future years it's likely that the age pension will only cater for the most basic of financial needs. Therefore, your ability to save for and fund your own retirement is becoming increasingly more important.

Superannuation is an extremely valuable tool for building your retirement nest egg - not least because of its tax benefits and the opportunity it offers for accumulating significant savings over a long period.

Just how tax effective is your super?

For many people, saving through super is much more tax effective than saving outside super. Any contributions your employer makes, plus any returns you earn on your super, are taxed at a maximum of just 15%, rather than at your marginal tax rate (which could be as high as 46.5%). Also, you can accumulate as much as you like in super. When you turn 60 you can withdraw it and pay no tax, or convert it to a tax free effective retirement income stream.

What other tax incentives is the government offering?
Salary sacrifice	If you make extra contributions to your super (above the 9% contributed by your employer) you will pay a maximum 15% tax on the extra contributions rather than your marginal tax rate (up to a limit).
Additional spouse contributions	If your spouse earns less than $10,800 and you add to his/her super, you can receive a tax rebate of up to $540. You can do this each year.
Super splitting with your spouse	If you even out the super contributions between yourself and your spouse you may save in tax when you convert your super into a pension.
Government co-contributions	If you earn less than $58,000 and make after-tax contributions to your super, the government will make a contribution of its own to your account as well (up to $1,500).
Access your super while you're still working	If you're over 55 and working part time you can access your super in the form of a pre-retirement pension while still contributing to it.
Small business capital gains tax (CGT) concessions	If you own a small business, the proceeds of the sale of certain assets can be rolled over to super so you can minimise CGT.
Use your super to buy a retirement income stream when you retire	If you use super to buy a retirement income stream, rather than cash it in, you can save tax on the lump sum. Also, the investment returns are not taxed.

There are many other advantages to maximising the value of your superannuation. Learn more about super & retirement.

Seek advice on the superannuation strategies that suit you

Whether you're an expert or novice investor, good advice is important, particularly when it comes to saving for retirement. Commonwealth Financial Planners specialise in helping you make the right investment decisions. A Commonwealth Financial Planner will work with you to develop a detailed plan designed to achieve your personal financial goals for retirement.

To find out more about how a Commonwealth Financial Planner may be able to help you, or to make an obligation-free appointment with a Commonwealth Financial Planner call 1800 241 996 or email us.

Important information

• The information contained on this web page is of a factual nature only and is not intended to constitute financial product advice. It has been prepared by Commonwealth Financial Planning Limited without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeking professional advice relevant to your individual needs before making a decision based on this information.
• Commonwealth Bank customers who wish to obtain information about Retirement Planning may do so by contacting a Commonwealth Financial Planner. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169 AFSL 231139. Commonwealth Financial Planning Limited is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.
• Superannuation and taxation considerations are general and based on present superannuation and taxation laws, rulings and their interpretation as at April 2006.