Super changes dent self-employed nest egg
The self-employed and business owners aged between 40 and 50 will be worse off under proposed superannuation changes, according to a superannuation expert.
Despite widespread delight at the superannuation announcements made in this year’s Federal Budget, Partners Superannuation Services director Martin Murden believes the changes make it difficult for this group to retire comfortably.
According to Murden, most self-employed can build up their superannuation only in their 50s, after having paid off major expenses like mortgages and children’s private school fees.
However, under the current rules, they can still amass a nest egg of $1-1.5 million by the time they reach 60 by making annual tax-deductible contributions of as much as $105,113 after turning 50, he said.
“However, with the new super regime set to become effective in the 2007-08 tax-year, all those well hatched plans are now in total disarray,” he said.
“Under the new rules, irrespective of how old you are, you will only be able to make tax deductible contributions of $50,000 per annum once the initial five-year transition period has ended.
“What this means is that if you turn 50 after the transition period ends, and you were hoping to retire at 55, you can only amass another $500,000 without tax, and at 60, $800,000.
“This is just not enough to retire on comfortably,” he said.
Murden advocates the proposed restrictions on contributions be scrapped, or that the five-year transitionary period be replaced with a two-tier contribution entitling those aged less than 50 to maximum annual tax-deductible contributions of $50,000, and those over 50 to $100,000.
Recommended for you
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
Australia has marked a decade among the best countries for retirement, according to Natixis, but with high inflation threatening their retirement goals, a third say they would get professional advice to improve their chances.
When it comes to the risks of acting as a responsible manager at an AFSL, compliance firm Holley Nethercote has shared a range of red flags that could see them facing disciplinary action from the corporate regulator.
Wealth management platform provider Netwealth has announced a partnership with FinClear to streamline trading capabilities for advisers.
