Superannuation Discussion + market volatility

[There'sOnlyOneJimmy]

Any point in putting in the annual $25K concessional contribution each year if the expected accumulation account balance will be over $1.6M by retirement age? (with conservative assumptions)

Like most things, it depends...
My general rule is: If your personal taxable income is over $45k, and your cashflow needs can do without it, and you want to invest for the mid to long term, then make the concessional contribution.

 

[exceladdict]

Like most things, it depends...
My general rule is: If your personal taxable income is over $45k, and your cashflow needs can do without it, and you want to invest for the mid to long term, then make the concessional contribution.

So really - other than opportunity cost - no downside?

 

[Quickstatus]

Thanks all

no downside

Well you don't have total control over your super fund. The Govt is always fiddling with the goal posts and eyeing hungrily at the ever growing pot of gold. Especially with the Covid spendathon

 

[There'sOnlyOneJimmy]

So really - other than opportunity cost - no downside?

I’m sorry, I can’t interpret your question

 

[cove]

The new level is now $1.7 million per person that is partially tax sheltered in superannuation so try to get there sooner rather than later.
No one likes the way Governments fiddle with the rules but the latest lift to $1.7 million was helpful.

 

[There'sOnlyOneJimmy]

Well you don't have total control over your super fund.

I agree, but...
As an example AustralianSuper (I have no affiliation, just an example) has A couple of bog standard funds that do pretty well.

Refer to their average returns over the last 10 years:

 

[travelislife]

Concessional cap is also $27,500 now too.

Post automatically merged: Aug 13, 2021

I agree, but...
As an example AustralianSuper (I have no affiliation, just an example) has A couple of bog standard funds that do pretty well.

Refer to their average returns over the last 10 years:
View attachment 255404

And with regard to additional concessional contributions you can add in the immediate return on only paying 15% tax vs. your marginal tax rate.

 

[There'sOnlyOneJimmy]

The Govt is always fiddling with the goal posts and eyeing hungrily at the ever growing pot of gold.

Yes, they fiddle around from time to time, but my hope is that there won’t be any retrospective adverse changes made.

 

[Quickstatus]

$1.7 million per person

Getting the SF to allocate 85% of my annual contributions to spouse so that hopefully we both can hit the Cap

AustralianSuper

Remarkable performer. Very happy.

I think it and some of the other industry funds have a stake in IFM who in turn have substantial stakes in Aus airports and other infrastructure projects

 

[cove]

Yes go for the double @Quickstatus.

 

[Quickstatus]

Yes go for the double

Spouse said "might as well do it now or I can easily divorce you and claim my share"

 

[Quickstatus]

only paying 15% tax vs. your marginal tax rate.

Extra 15% if income more than $250k.
Now I assume that every cent i earn is taxed.
So for me total tax for last financial year as a % of total taxable income = approx 30%.
Every extra $ of income does not substantially increase the % of tax

So it is really not "concessional"

 

[cove]

Be careful in that area @Quickstatus !

 

[Flashback]

In the UK you can dump in £40k a year before there is any chunk of that taken out by HMRC. Is that the same as what you're referring to as concessional contributions?

 

[Quickstatus]

Concessional contributions just mean that the amount that is deposited in the super fund (before it is taxed and becomes after tax income) is taxed at a lower rate than if it were taxed in the normal way.
There is no way to deposit $$ into superfund without it being taxed going in or initially taxed as income

Be careful in that area

Treading very carefully

 

[travelislife]

In the UK you can dump in £40k a year before there is any chunk of that taken out by HMRC. Is that the same as what you're referring to as concessional contributions?

You can deposit up to $27,500 each financial year in pre tax income that is then taxed at 15% (rather than your marginal rate, and reduces your taxable income) when it enters the super fund.

This is inclusive of any amounts paid in as part of your 9.5% mandatory super from an employer. So up to certain income levels it can make sense to top up the gap and max out the concessional contribution for a guaranteed return.

 

[Flashback]

Alright, sounds somewhat similar then .. I think.

 

[There'sOnlyOneJimmy]

There is no way to deposit $$ into superfund without it being taxed going in or initially taxed as income

Currently you can contribute $110,000 per year into super without it being taxed on the way in. This is called a non-concessional contribution.
It’s not taxed AND you don’t get a tax deduction.
If you want, you can ‘bring forward’ another 2 years worth of contributions into the current year (so $330,000) in one year. Then you have to wait out the time until you can contribute again.
If people have a lump of money they want to get into super, and it’s coming up to the end of the financial year, they will do $110,000 in June of 2021, then $330,000 in July of 2021, then no more before July of 2024.

 

[Quickstatus]

Currently you can contribute $110,000 per year into super without it being taxed on the way in

Well it was initially taxed before it became the $110k
Either as personal income
Capital gains tax, etc

I suppose lottery winnings would be an exception

 

[andye]

In the UK you can dump in £40k a year before there is any chunk of that taken out by HMRC. Is that the same as what you're referring to as concessional contributions?

In the UK (as you almost certainly know) the contributions aren't taxed but the retirement withdrawals are (treated as income).