Noel Whittaker - Superannuation Made Simple

International bestselling author, finance and investment expert, radio broadcaster, newspaper columnist and public speaker, Noel Whittaker is one of the worlds foremost authorities on personal finance.

Noel reaches over seven million readers each week through his columns in major Australian newspapers in Sydney, Melbourne, Perth and Brisbane. He is a contributor to magazines and websites, and appears on radio and television.

Noel is one of Australias most successful authors, with 22 bestselling books achieving worldwide sales of more than two million copies. This book, Making Money Made Simple , set Australian sales records and was named in the 100 Most Influential Books of the Twentieth Century.

For 30 years, Noel was a Director of Whittaker Macnaught, one of Australias leading financial advisory companies, with more than two billion dollars under management. He relinquished all interests in that business in 2007.

In 2003, he was awarded the Australian Centenary Medal in recognition of his services to the financial services industry and in 2011 he was made a Member of the Order of Australia for service to the community in raising awareness of personal finance.

Noel is now an Adjunct Professor and Executive-in-Residence with the Queensland University of Technology and a member of the Australian Securities and Investment Commission (ASIC) consumer liaison committee.

We all want to save tax and if you go to a social function you can bet that somebody will be complaining about the level of taxes in Australia and how the government should do something about it. Yes, we are highly taxed here with income tax of nearly 40% cutting in at a moderate level of income and capital gains tax of almost 50% if you sell an investment within a year of buying it.

But if I told you about a country that had income tax at a flat rate of just 15%, no Medicare levy, and capital gains tax of just 10%, Ill bet youd be tempted to migrate to it, particularly if you discovered that once you retired there was no income tax to pay at all.

Well, the good news is that you dont need to migrate. You can have it here in Australia right now! All youve got to do is keep your money in a wonderful vehicle called superannuation.

The problem is we are cynics. Anybody who knows about money understands that superannuation is one of the greatest investment vehicles around but unfortunately there is a general perception that it is something to be wary of. Whenever I give a seminar on superannuation I start off by asking those who love superannuation to put their hands up theres a very small response. The next question is who hates superannuation which usually results in a few hands going up. By now most of the audience have not responded in a positive or a negative way so my final question is, who is confused about superannuation? Invariably this results in a sea of hands.

Its obvious that most people are mystified by superannuation but the good news is that for most people it need not be complex at all. Certainly there are some extremely complex regulations but these tend to apply to very wealthy people, or to special cases such as immigrants. For 99% of Australians the rules are simple and, when you finish this book, you should realise what a simple and valuable vehicle superannuation is.

When you question those who dislike superannuation you find that their objections are usually the rules keep changing, you lose control, there are too many taxes, or how do I know there will be any money left in superannuation by the time I want to retire? These responses are understandable but as you read on, you will discover that many of the rule changes have been beneficial and in most cases the taxes are far less than you would pay if you didnt take advantage of superannuation. Anyway, if control is what you want, you can always have your own self-managed fund.

So its time to change your thinking. Superannuation is almost certain to play a major role in your investment program and, used wisely, will be one of the best tools available to speed you on the way to wealth.

No other vehicle allows you to grow assets in a low tax area and then convert this to a zero tax area when you retire. Stay with me and well talk about why you need to build wealth for when you retire. My goal is to have you not just understanding but loving your superannuation when you come to the end of this book. For this reason the major points and important case studies are repeated in some places.

The swing towards superannuation has been pushed along by the growing realisation that the number of workers supporting each non-worker is decreasing rapidly. This is because of job losses caused by advances in technology, falling birth rates, and the simple fact that people are living longer. In 1901 only about 48% of males and some 56% of females reached 65. Today average life expectancy is 80 for men and almost 85 for women. Thanks to a growing awareness of diet and exercise, as well as medical break-throughs, we can expect to continue this trend to a longer lifespan. In America the fastest growing group is the over 100s whose numbers have reached a level where the radio stations do not bother to send them birthday calls any more.

Before the Industrial Revolution people aged 65 and over were less than 3% of the population today they are nearing 15%, and are forecast to be 25% of population by 2030. Your grandfather almost certainly started work at 16, retired at 65 and died at 68. Your children may well start work at 22, retire at 60 (if they can afford it) and live till 95. That means a huge amount of their income will need to be set aside to support them when they stop work.

When you think about our dropping birth rate, and the increasing number of young people who are attending universities and similar institutions, you may start to wonder who is going to be working to pay for all those who arent.

According to United Nations figures, the ratio of working taxpayers to non-working pensioners is 3:1 now but is expected to tumble to just 1.5:1 by 2030.

This begs the question: who is going to pay for your retirement? There is little doubt that our welfare system, and our health system, will be unable to continue to provide the current generous benefits. Those who dont make some provision themselves for their retirement may have a very Spartan existence indeed. This is why superannuation is so important.

Will they take away the aged pension? Will unemployment benefits be slashed? They are common questions but the conventional wisdom is that these things wont happen as no government would be brave enough. After all, who is going to risk the huge voter backlash it would cause. True, if it were done in one fell swoop, but who is going to notice if it is done little by little?