To try to avoid having to live on baked beans in retirement, we need to ensure that you are putting a fair amount of your current earnings away. 20% of your gross income every year for your working life is the (slightly scary) rule of thumb.
This is generally done by a combination of 9.5% SGC from employers, top up salary sacrifice and additional after tax contributions.
One problem has always been that, if you fail to utilise a cap in any year, you lose it. However, there are new catch up rules coming into play which may be particularly useful for those taking career breaks – to have kids for example. Or those who forget to contribute for a year or two!
The devil as always is in the detail.
- This only applies to concessional contributions, currently capped at $25k pa. It does not apply to after tax contributions (NCCs).
- The first time you can carry forward an unused cap will be for unused 2018/19 caps, in the 2019/20 year,
- The unused amounts can only be carried forward for five years,
- Your super balance must be less than $500k on the 30 June the year before.
The ability to bring forward caps will also be particularly useful for those wishing to back out large, one off, capital gains.
For more details please call.
Lindsay 0413 952 180