Newspaper article Daily News (Warwick, Australia)

Get to Know Your Super

Newspaper article Daily News (Warwick, Australia)

Get to Know Your Super

Article excerpt

Byline: Daniel Spry

SHOULD I take my super as a lump sum or not?

When it comes to accessing your super, it's important you make the right choice.

You've spent your working life accumulating super.

So when the time comes, are you better off taking a lump sum, regular income or both?

Let's weigh up the alternatives so you can start to consider what may be best for you.

Taking a lump sum

If your super has been managed on your behalf during your working years it can be tempting to take the lot when you can. But make sure you weigh up the upsides and downsides before deciding:

Think long term

A lump sum in your hands means you can spend it as you wish.

For example, paying off the mortgage may be a good financial decision.

But if it will mean you have no super left, what will you live on?

It's easy to spend a lump sum quickly so think ahead because in retirement a bad decision can be financially impossible to recover from. Work out how you can support yourself when you're no longer working.

Will the tax office take a chunk?

When it comes to taking a lump sum, look into tax rules - if you're under age 60 you may create a tax liability, which would eat into the money you'll need for retirement.

Are you confident making your own investment decisions?

Sound investment plans may help you avoid relying on the government pension down the track. Evaluate your investment knowledge and the effort you're prepared to put in - do you feel confident in your ability to invest your money to achieve the returns you need or will you need help?

Keeping your money in super

Sure, keeping your money in super can be one of the most tax-effective options. But there are other considerations as well, as you'll see below.

Make the most of tax benefits

By starting a pension in superannuation your money is not exposed to the tax rules that apply to money held outside super:

No tax is applied to your investment earnings in your super pension

No tax is applied to your income drawn from age 60

Tax offsets of 15% are applied to the tax payable on your pension you draw if you're aged 55 to 59, which means in the lead-up to turning 60, 15% of your taxable income is effectively tax-free. …

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