Are You a Sprinter?

superannuation tax and self management super fund blog post

Who could ever forget Usain Bolt’s record-setting run in the final of the Men’s 100m at the 2012 London Olympics? Bolt ran the race of his life in a time of 9.63 seconds, setting a new Olympic record for that distance and defending his gold medal from the 2008 Beijing Summer Olympics, cementing his place in athletic history as one of the greatest sprinters of all time.

But how would he have fared running the marathon against Stephen Kiprotich of Uganda, one of the most elite long distance runners of our time, and the marathon gold medallist at the same London games?

The fact is that each of these races requires its own unique physique, training regime and conditioning. You just can’t approach a long distance race the same way as you would a sprint.

Historically some have left building up their super as something to be done in the later years of their working life, when the kids are off their hands and both spouses have returned to full-time work. For many RDL clients, this strategy has worked well in the past. A kind of “sprint to the line”, made possible by generous superannuation tax incentives.

Government changes to the tax incentives on superannuation as recently as the May 2016 Budget have signalled that saving for retirement is now going to be more of a long-distance race than a sprint.

Lower limits for concessional (tax-deductible) contributions, as well as the $500,000 cap on non-concessional (non-tax deductible) contributions, will force a change in strategy – contributing to super regularly, rather than relying on big contributions closer to retirement.

Despite many changes over the years, super still remains, and is likely to remain, the most tax effective means of saving for and investing during retirement.

See your RDL advisor about how you can wisely plan for your retirement, and remember – to date no-one has successfully sprinted a marathon.

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