Superannuation or simply "super" is
Australia's version of America's 401(k). One of the many differences, however,
is that the super rate increases over time. According to the Australian
Securities & Investments Commission, the rate is expected to increase from
9.25 percent at present to 12 percent by the year 2019.
Is this increase a bad thing? Hardly, because the
"super" fund shows just how serious the government is about retirement benefits. The
rate may be increasing, but the increase in contributions allows professionals such
as doctors to retire early. Employers, in turn, are obliged to contribute the
correct amount to their workers' super funds. Workers themselves can, however,
choose to contribute to the fund.
Super contributions can continue up to age 70, but
workers can withdraw from their Supers as early as age 55 to 60. This is
possible by creating a "transition to retirement" (TTR) account.
Designed for people planning on working beyond the preservation age of 55, a
TTR can allow them to withdraw up to 10 percent of their super savings without
tax infractions.
The math may appear simple, but superannuation is just
the tip of the tax iceberg. There are other taxes that must be accounted for to
mitigate confusion.
