Self-employed superannuation: A quick guide

When you’re running your own business, your super balance is probably the last thing on your mind. Almost 25 per cent of self-employed Australians have no super balance, compared to 7 per cent who are employed by a company. What’s more, the average balance for self-employed people is $20,000 lower than the employed average, according to the 1Association of Superannuation Funds of Australia (ASFA).

This disparity could be due to the fact that those who are self-employed aren’t required to contribute to their super funds, and as a result many don’t contribute at all. Luckily, setting up superannuation when you’re self-employed can be quick and easy.

Self employed person

If you’re self-employed, contributing to superannuation doesn’t have to be hard.

How to make contributions when you’re self-employed

It really is very simple. The best place to start is to research different super funds by looking at what they offer and their benefits and decide on which one you want to save with. Then, if you have any super accounts from your previous employment, you might want to think about consolidating your accounts, so you just have one superannuation account to monitor. If you’re not sure who you hold super accounts with, you can follow these steps to find your super. Next step – start contributing! We told you it was easy… The team here at Club Plus Super can help you with each step, making the whole process stress free.

Making contributions and enjoying tax benefits

Self employed saving

How much should you contribute to fund a comfortable retirement?

But how much should you contribute? You don’t want your contributions to be too large that they make cash flow a problem, however it’s a good idea to evaluate how much super you’ll need to lead the lifestyle you want during your retirement – then work out how much you need to regularly contribute to build up that sum. 2Super Guru suggest that to lead a comfortable retirement, single people will need $545,000 and couples will need $640,000.

Employers are currently required by law to contribute 9.5 per cent into their employee’s super accounts so that could give you some guidance on how much to start with, if you don’t have the time to sit down and work out how much you’ll need right now.

Generally, you’ll be able to contribute up to $25,000 a year to your super before tax. These contributions are taxed at just 15 per cent in your super account, making superannuation a great tax-effective way to save for your future.

Unfortunately, the superannuation accounts of self-employed workers here in Australia have long been neglected but it doesn’t have to stay that way. If you’d like some advice on the best way to save for your retirement whilst making the most of the tax benefits available to you then you can get in touch with the Financial Planners at Club Plus Financial Planning to get started.

Contact our Member Support Specialists who can assist in setting up an account with Club Plus Super or you can join online. We can also help you to consolidate any other accounts you might hold and organise your regular contributions to get you on your way to an enjoyable retirement.

 

1Association of Superannuation Funds of Australia. Super and the self-employed https://www.superannuation.asn.au/ArticleDocuments/359/Super-and-the-Self-Employed-May2016.pdf.aspx?Embed=Y
2Super Guru. How much super will I need? http://www.superguru.com.au/retiring/how-much-super-will-i-need