Superannuation is often a part of our financial planning that is left in the background, but certain life events may mean you need to make some fundamental decisions about it. Here are some key tips on what you may need to consider.
Tying the knot can change a lot of things in our finances. Budgeting, saving, spending and buying insurance are all issues that we will tend to reappraise as a couple, but super is often left out of calculations. Issues such as the amount of insurance cover you both have in super and beneficiary nominations are critical to avoid surprises later on.
While it is not possible to combine your super funds, it is important that you discuss and coordinate your investment strategies and consider your retirement goals as a couple. This ensures you are on the same page in terms of your expectations of retirement lifestyle and can fund it appropriately.
If one partner eventually decides to leave work to raise children then this may cause a significant interruption to your super accumulation that should be dealt with. Extra expenses and less income may mean you need to cut back on contributions for a while, but you should plan how this shortfall will be made up by boosting contributions in future years when circumstances allow.
You should also take advantage of any government assistance available on your super, such as the spouse contribution scheme. If your spouse is earning very little or nothing at all, then you may qualify for a rebate of up to $540 p.a. on any contributions you make to their super.
Talk to your adviser for further information.
Redundancy is something that many people will unfortunately deal with in an increasingly economically rational world. How you plan your spending and make decisions, regarding employment will likely be top of mind when this occurs, but super should not be left out of the decision making process.
Payments made to you on redundancy can be quite complex to deal with and can have serious taxation consequences. There may be opportunities in relation to using part of your redundancy payment to make super contributions and there may also be issues to deal with in relation to any insurance cover you had in your employer’s super fund.