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Funding the dream
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23 May 2007 
 
Baby boomers have the perfect opportunity to plan ahead and save more for the future by taking advantage of changes to superannuation rules, Edwin Gill, Regional Manager for Perpetual Limited told delegates at the Chartered Accountants Business Forum in Melbourne earlier today.  
“Many baby boomers don’t even know how much money they have in their superannuation accounts, and time is running out as many boomers hit their 60’s this year,” Gill said 
"It isn’t too late to take advantage of the new superannuation laws. There are some timely opportunities that people can utilise both before and after 1 July, with the changes to super starting this year designed to boost retirement savings, this is the ideal time for baby boomers to consider their retirement plan” Gill said.  
Some timely super opportunities:

  • Before June 30 there is a one off opportunity to contribute up to $1 million in after-tax dollars. After that, the yearly maximum you can contribute is $150,000
  • From July 1, super payouts are tax-free when you retire after you turn 60. This is a significant change.
  • Salary sacrifice. Under the current rules, how much you can put away pre tax is determined by your age. From July 1 this year, there will be a flat maximum of $50,000 for everyone. There will be a five-year transition period for over-50s, which will allow you to contribute up to $100,000 a year in that period.
Yet although most of the changes will be beneficial, Kevin Bailey, Chairman of Money Managers Group says it will still be quite difficult for a lot of people to work out the best strategy for them.  
“Once you get your money into superannuation people aren’t aware that you need to have an investment strategy. People aren’t measuring what they are getting as a return. They don’t know whether they are being risqué or whether they are being conservative. They don’t measure the costs and charges that they are paying.” Bailey said. 
 
Having a strategy is not enough. It should benchmark risk and return and decisions should be justifiable. Bailey stresses the importance of being aware of how your super fund is performing, simple measures like taking notice of fund fees and comparing fund performance against other funds can make a significant difference. 
“Baby boomers owe it to themselves to have a sound investment strategy. When we are talking about wealth creation for baby boomers we are really talking about stopping baby boomers from wealth destruction,” Bailey said