In a world where the value of everything is determined by monetary worth, you cannot have real freedom if you don’t have financial freedom. You should therefore do all you can to defend your financial freedom throughout your life. But if you depend on salary income, your financial freedom is only guaranteed until your retirement or dismissal. Since there is a need for freedom even after you have stopped working, it is prudent to ensure that you are resistant to any form of financial insecurity. This can only be done by securing your financial future.
What is Superannuation?
There are various channels you can use to secure your financial future like insurance, investing, and savings. For an employee who is used to a salary-dependent life, superannuation is the perfect scheme for you as you can opt to receive the benefits as an income stream rather than a lump sum. This gives a sense of continued salary income. If you decide that going super is your way, it is wise to get advice from professionals before signing an agreement with any superannuation scheme. This will help you know what will work for you best. Otherwise, you may miss some incentives from the government and your employer. Superannuation has many benefits besides offering continued cash inflow. Here are some of the gains you get when you choose superannuation.
Salary Sacrifice Means Reduced Income Tax
Superannuation is a pre-tax contribution, meaning your contribution will go to the scheme first before the government deducts income tax.
In Case of Bankruptcy, Superannuation Assets Are Safe
In an event that something beyond your control disrupts your cash flow and disenables you to pay your credits, your superannuation assets are protected. Superannuation is your security, meant to sustain you when you are no longer earning a salary. Taking it away means leaving you helpless. But it is important to know that it is illegal to transfer your financial assets to a superannuation account after sensing that there is an impending disruption to your cashflows, and your creditors may come for your assets.
Superannuation is a Tax Effective Way to Save
The government knows that those who retire without savings will be a burden to the state. To avoid this, some incentives are often put in place to encourage people to save for their future. These incentives include tax breaks on superannuation and zero income tax when receiving your benefits after retirement. In Australia, the government sometimes gives extra money to those who voluntarily opt to pay for their retirement. It is therefore advisable to get professional help as you compare and review your Australian super before taking a step.
No Fee for Additional Consultation
You may be in a dilemma on which financial institution to save your super with and for how long you should do it. When you only put the basics into account, the super valuation may seem straightforward. But you give it a deeper look, pension valuation is too complex that trying to understand everything is like a waste of time. This is a field of study for some people. But the good news is that there are people out there who will do all this work for you and help you know what suits you the best. When you are an existing member, most schemes offer consultations at no additional fee.
Additional Contribution from Employer
Employers are only required to divert 10% of the employee’s salary towards superannuation contributions. But some employers entice their employees to embrace salary sacrifice by offering additional bonuses towards the employee’s super. It is however important to know that not all employers do this.
Some financial institutions offer disability and death benefits for their super clients. This is like killing two birds with a single stone. You are securing your financial future and at the same time, you are getting insurance cover.
Bottom Line: Don’t Take the Risk
Do not take the risk of putting all your trust in your savings or investment. If you have a personal investment plan there is a high likelihood that it might fail. A lot of new businesses fail within a year or years later after they are formed. If you invest in the stock market, on the other hand, there might be no ready buyer just when you want to sell them. Note that this is not meant to discourage you from investing, as investing is an incredible idea. But even when you have an investment plan, it is always advisable to save with a pension scheme towards your retirement.