Trish Power’s latest book (special offer), surviving post-GFC era (10 strategies), cheapest funds, 10 must-know super rules, Q&As
Welcome to the OCTOBER 2011 edition of SuperGuide newsletter, a free and independent source of superannuation information for consumers.
The highlights of the OCTOBER 2011 SuperGuide newsletter are:
- SPECIAL OFFER: My latest book, Super Freedom: A woman’s guide to superannuation is now available. As a special offer to SuperGuide readers, I will autograph all copies of Super Freedom purchased from our online bookshop (managed by bookstore Educated Investor). Catering for the Christmas rush and delivery times, this special offer closes on 16 December 2011. Allow several days for delivery. Click on the book link on the right hand side of the website, or click on the first article link below to find out more information, or to order the book.
- WOMEN AND SUPER: A WORRY-FREE FINANCIAL FUTURE IN SIX STEPS. The first question I was asked when I told friends that I was writing a book for women on superannuation and retirement was: ‘Why does there need to be a book on super especially for women? Don’t men have to think about this stuff too?’ Yes, men do have to think about this stuff, but women have to deal with this stuff in a different way to men. Click on article link below to find out more.
- MONKEYS STOP WOMEN TAKING SUPER CONTROL. For those who may be holding the view that wealth accumulation is just about money, I ask the following question: until now, what’s stopped many women from thinking about saving for retirement? I list the top 14 monkeys on women’s backs that stop many women from taking control of their financial future. You can also check out two real-life inspired case studies where Lily (age 55) and Sahn (age 45) have dislodged the monkeys and created a worry-free retirement. Click on the article links below to find out more about the monkeys, and the case studies.
- SURVIVING THE POST-GFC ERA: 10 SUPER STRATEGIES. What has been your reaction to the GFC? Have you adopted a ‘wait and see’ strategy, or have you switched investment options, or even stopped making super contributions? How are you going to rebuild your savings in the post-GFC era? I have compiled a list of 10 practical and common-sense strategies that individuals can consider as a means to take back control of their wealth accumulation plans. Click on the article link below to find out more.
- SUPER FUNDS LOSE 5.1% IN 3 MONTHS TO 30 SEPTEMBER 2011. The median superannuation growth fund lost 1.9% of value for the month of September, and has suffered a depressing loss of 5.1% for the financial year to date (that is 3 months, from July 2011 through to 30 September 2011), according to rating company Chant West. Click on the article link below to find out more
- CHECK OUT THE CHEAPEST FUNDS. The award for the cheapest fund in Australia goes to… ah, to find out the answer you will need to click on the article link below.
- SUPER FOR BEGINNERS: 10 MUST-KNOW FACTS. A handy guide for those seeking to understand how super works, and the list also serves as a refresher for those readers who may be more familiar with the super rules. Check out the article link below for more.
In this month’s newsletter, we also let you know that the Department of Human Services is now responsible for early release of super on compassionate grounds. We also include some popular Q&As covering salary sacrificing, boosting your spouse’s super account, retirement rules for over-65s and managing CGT with super contributions.
For those readers who have sent emails to the SuperGuide team, we have a substantial backlog in the time taken to acknowledge emails. Although we acknowledge all emails, due to the number of emails that we receive, we cannot promise to respond to all questions.
If you like this newsletter and our website, then please pass on the newsletter to your friends. Also, you can follow us on Twitter, or you may prefer to become a SuperGuide fan on Facebook, or do both.
Thanks again for your support and interest in SuperGuide.
Trish Power
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THE SOAPBOX
Women and super: A worry-free financial future in six steps
I have wanted to write a practical non-technical book for women on superannuation for a long time. The first question I was asked when I told some female friends that I was writing a book for women on superannuation and retirement was: ‘Why does there need to be a book on super especially for women? Don’t men have to think about this stuff too?’ Yes, men do have to think about this stuff, but women have to deal with this stuff in a different way to men. Read more
Monkeys stop women taking control of super
For so many women, the needs of other people usually come first — children, partner, parents, friends and even workmates. Often, for a woman to think about her own needs, she has to face a health challenge, financial stress or a relationship breakdown. Read more
FEATURES
Surviving the post-GFC era: 10 super strategies
What has been your reaction to the GFC? Have you adopted a ‘wait and see’ strategy, or have you switched investment options, or even stopped making super contributions? How are you going to rebuild your savings in the post-GFC era? I have compiled a list of 10 practical and common-sense strategies that individuals can consider as a means to take back control of their wealth accumulation plans. Read more
Super funds lose 5.1% in 3 months
The median superannuation growth fund lost 1.9% of value for the month of September, and has suffered a depressing loss of 5.1% for the financial year to date (that is 3 months, from July 2011 through to 30 September 2011), according to rating company Chant West. This mediocre result means Australian super funds have posted the worst 3 month returns since the December 2008 quarter (which followed the collapse of Lehman Brothers investment bank). Read more
Comparing super funds: check out the cheapest funds
Rating agency, SelectingSuper has conducted some nifty research on the fees that super funds charge, and in generous fashion SelectingSuper regularly releases the highlights of this research for free access by the general public. Read more
Investment performance: Benchmarking super fund returns
Q: What you do is very important, thank you. I am 62 years, retired and draw an allocated pension. What I need is to get sound independent advice about whether I am in the best fund for my needs and how my super fund compares. I am considering a change to Australian Super, but I need to know whether Australian Super is secure and strong (as I believe it to be?); what is the Australian Super return for an Allocated Pension in their Cash Option for the past 12 months, and is there a better Cash option Allocated Pension on offer from some other secure fund? Read more
HOW SUPER WORKS
Super for beginners: Top 10 must-know facts
In January 2009, we launched the SuperGuide website, and since that time we have received thousands of questions on different aspects of superannuation. We try to represent as many questions as possible in the articles we publish, while also ensuring that we cater for those readers who are just beginning their superannuation education. Read more
Don’t sacrifice your Superannuation Guarantee
Salary sacrificing is a popular strategy for employees on middle-to-high incomes who want to increase their superannuation balances while reducing the amount of income tax payable on their salary or wages. Some employees have to watch out that they don’t lose Superannuation Guarantee (SG) entitlements in the process. Read more
Accessing super early on compassionate grounds
From 1 November 2011, any Australian applying to access super benefits early on compassionate grounds must apply to the Department of Human Services (DHS) rather than the Australian Prudential Regulation Authority (APRA). I explain what ‘compassionate grounds’ means later in the article. Read more
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CASE STUDIES
Case study: female, 55 and fearful about retirement plans
Lily, aged 55, has mixed feelings about her future retirement. She swings between being philosophical and fearful about her financial position, Lily has spent most of her life rearing her children and, until now, worked in low-paid jobs casually and part time before getting divorced later in life. She has $70,000 in super, which she understands will mean that she can get the full Age Pension plus a few thousand extra each year from her superannuation savings. Lily is forgetting one thing. She hasn’t retired yet, which means she still has 10 years of compulsory employer super contributions to be paid into her super account. Lily also now earns $50,000 a year, which means just for turning up for work her employer contributes $4500 to her super each year. Read more
Case study: female, 45 and a worry-free financial future
Sahn, aged 45, has only $35 000 in super and thinks the retirement planning stuff is all too hard. She expects to go on working until she dies, just to survive. A friend tells her about Trish Power’s six step process, and the existence of the free ASIC MoneySmart superannuation calculator. Sahn’s friend also suggests that she may want to work until at least the age of 67 (her Age Pension age), which means Sahn has another 22 years to accumulate retirement savings. Sahn earns $50,000 a year, which means just for turning up for work her employer contributes $4500 to her super each year. Read more
Q&As
Boosting your spouse’s super account
Q: My wife and I have established an SMSF. I’m fully employed while my wife has been unemployed since 1 July 2011. She is most unlikely to gain employment before the end of this financial year. My question concerns maximising tax strategies for this year. Can I contribute on her behalf in after-tax dollars funds into our SMSF, and claim a tax deduction for those contributions, and can we also claim a co-contribution by the government? I am probably looking at contributing somewhere between $5,000 and $10,000. Read more
What are the super and retirement rules for over-65s?
Q: My wife (age 63) and myself (age 65) have a small business. I was told by an organisation that at 65 or over I could put money into super, pay 15% tax on the way in and then draw it out when I wished and pay no tax. In fact I have been told to pay myself $30,000 or less and “launder” the rest of my income through my super fund. My accountant has told me that she thinks I have to set up a pension scheme. Could you please confirm what the correct situation is? Read more
Managing CGT with super contributions
Q: I am about to make a capital gain of about $200,000. My marginal tax rate is 30% and I am an employee and 43 years old. I want to contribute the equivalent of the capital gain to my super, which is not self managed, so I save some money for the long run? Is this a non-concessional super contribution and thus I can claim it all as a tax deduction, or do I need to contribute an amount that when 15% is taxed and charges taken out, it is the same as the Capital Gain Tax? Read more
Contributions caps relate to financial year, not calendar year
Q: I understand the three-year bring-forward rule that allows you to contribute up to $450,000 in after-tax contributions. My question is: What date does the second three-year period start? For example, if I contributed $450,000 on 1 Dec 2010, does that mean I can contribute another $450,000 after 1 July 2013 (or should it be after 1 Dec 2013)? Read more
