(Guest post by Naomi Rosenthal, Tudor Investassure Pty Ltd)
Why would you ever stop doing what you love?
As a business owner, “retiring” is probably the last thing on your mind. You have the usual pressures of being self-employed; cash flow constraints, time management and profit margins. However, to ensure you reach your goals, in business and in life, thinking about your eventual retirement is critical, otherwise what ultimately is the point of all this effort?
Here are five great ways you can maximize your retirement savings:
• Save for tomorrow
Aesop’s fable about the ant and the grasshopper highlights this position, with the grasshopper realising as he is starving that “It is best to prepare for the days of necessity.” Regularly saving today towards your future retirement ensures that when you reach the “winter” of your life, you have the “stores” (resources) to fund your lifestyle.
• Tax Free Retirement Income
Super is still an excellent vehicle for creating tax free income for retirement. Despite rules that constantly move and governments that meddle, it will likely continue to have the lowest tax rate of any structure. If you do not breach any laws, the most tax you’ll pay while you accumulate your wealth is 15% and when in retirement (after age 60) you can currently enjoy tax free income.
• Tax benefits today
This year, if you are under age 60 concessional contributions of up to $25,000 may be made inclusive of Super Guarantee (and if you are over age 60 up to $35,000). It is necessary however that the appropriate superannuation contribution rules are followed for your situation and you should speak to your financial adviser to ensure you go about contributing in the most appropriate manner dependent on your circumstances to get the applicable deductions. Depending on your marginal tax rate this can provide tax savings of up to 31.5%.
• Capital Gains Tax small business concessions
This is a complex area and you must seek professional tax advice if you are looking to utilise the Capital Gains Tax small business concession rules. There are a number of basic conditions that must be met for eligibility and there are four concessions available to small business owners to enable you to reduce any capital gain on the sale of active assets of a business. By understanding your eligibility and how the concessions can work together, you can minimise your capital gains from the sale of your business and maximise your retirement savings.
• Make your fund work harder for you
You’re likely doing the best you can to set aside funds for your future, but how hard are those funds working for you? Some questions to consider are:
Do you know exactly where you’re invested? Is your account pro-actively managed? Do you have transparency within your fund and access to view your account so you can stay on top of your investments and stay in control? Are you invested in specialist managers? Is your performance far better than the average or do your funds hug the benchmarks? Are you investing within the limits of your risk appetite and appropriate to your time frames? Are you sufficiently diversified to ensure you maximise the risk and return trade off?
The benefit of speaking with your financial adviser is that they can understand your current situation, find ways to maximise investment, tax and savings opportunities and ensure that while you’re living for today, you’re well on the path to having tomorrow sorted out too!
About the author & disclaimer:
Naomi Rosenthal, JP M App Fin (FP), BA (Psych), F Fin (269088) is an Authorised Representative and Tudor Investassure Pty Ltd is a Corporate Authorised Representative of Professional Wealth Services Pty Ltd Australian Financial Services Licence No. 312047 ATF Professional Wealth Services| Unit Trust | ABN 58 174 609 776 | Ground Floor, 56 Berry Street North Sydney NSW 2060 | PO Box 1142, North Sydney NSW 2059 | www.pws.net.au
This information is of a general in nature and may not be relevant to your individual circumstances. You should refrain from doing anything in reliance on this information without first obtaining suitable professional advice. You should obtain and consider a Product Disclosure Statement (PDS) before making any decision to acquire a product.
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