Recent research indicates that hundreds of thousands of Australian retirees are potentially facing unnecessary taxes on their superannuation balance.
Approximately 700,000 retired Australians aged over 65 still maintain an accumulation super account, which could lead to thousands of dollars in additional taxes during their retirement, as highlighted by the Super Members Council (SMC).
For retirees with $100,000 in an accumulation account rather than a pension account, the potential super tax burden could reach $4,500.
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This tax figure doubles to $9,000 for individuals with $200,000 in their accounts.
The average super balance for men in Australia aged between 65 and 69 is $453,075, while for women in the same age category, the average balance is $403,000, according to data from the ATO.
The SMC expressed concern that many older Australians lack “basic advice” on how to shift their superannuation into the tax-free retirement phase.
“Insufficient knowledge about super can result in poor financial decisions, such as leaving accounts inactive or making withdrawals without proper planning,” stated SMC CEO Misha Schubert.
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“Providing straightforward information and advice to more Australians is a crucial missing element in the retirement planning process.”
Research by the SMC found that 39% of retirees with funds remaining in the accumulation phase did so because they were unsure of their next steps.
Only 26% of current retirees report having sought financial advice from their super fund, while four out of five Australians aged 45 to 54 require advice but feel they cannot afford it.
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Schubert noted that the Australian government’s upcoming financial advice reforms are expected to address this gap.
Labor’s “Delivering Better Financial Outcomes” package has been proposed but is still awaiting legislation.
This initiative aims to guarantee access to quality and affordable financial advice for all Australians.
Additionally, it will enable super funds to better assist individuals at critical life stages with tailored support for retirement, according to the SMC.
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