Superannuation - Super is still the best way to plan for retirement

Planning for retirement is one of the ‘hot topics’ in personal financial management. One reason is that Australia’s rapidly ageing population is straining the resources of the social security system – the older the population gets, the more money the government needs to fund age pensions. There are real fears that the government will not be able to maintain current pension levels in the future. The situation is expected to worsen when the ‘baby boomer’ generation reaches retirement age.

 

To alleviate this problem, the Government is trying to encourage people to assume greater responsibility for their retirement income and to increase savings to ensure their future financial well-being.

 

Many financial experts agree superannuation is still the best way to provide for retirement, due mainly to its tax advantages. If you’re self-employed, for example, you can claim a tax deduction on contributions of $5,000 a year plus 75 percent of any additional contribution (up to your maximum deductible contribution limit). Superannuation is also a good long-term investment for employees because the interest earned is taxed at a comparatively low rate of 15 per cent (maximum).

 

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