Superannuation is not considered a sexy topic by many Australians. Instead, the idea of saving for retirement, compared to buying a new set of Jimmy Choo shoes, can be a tough pill to swallow.
But, with life expectancies increasing and the government tightening their position on aged pension concessions, it’s never been more important to start planning and reviewing your Superannuation retirement.
If you want to achieve your financial goals, whether they be early retirement, travel & lifestyle or homeownership, you’ll need to start considering alternative ways to grow your super, and right now.
While it’s compulsory for employers to make contributions into your superannuation fund (currently at 9.5% of your income), nowadays this just won’t cut it. For the every-day Aussie, these employer super contributions won’t even cover the most basic of retirement dreams.
In this article, we will highlight 5 ways you can boost and maximise your super, without having to make radical changes to your income or lifestyle. By making small sacrifices today, you could achieve significant returns on your money tomorrow.
So, here you go…
1. Review Your Super & Consider Switching funds
When it comes to your superannuation, you should have your money invested with a super fund that is going to have your best interests at heart and your money working hardest for you.
This is why it can be beneficial to review the results of your super fund each year.
As part of your review, you may like to consider whether:
- There are other investment options available
- The level of insurance you have is appropriate for your needs
- You could get a more competitive deal on your fees or premiums from an alternative super fund
- The returns from your current fund satisfy your needs and financial goals
If you are considering switching funds, it’s key to do some research and choose one that best suits your circumstances.
2. Find and Claim Any Lost Superannuation
Did you know there are around 30 million superannuation accounts, yet only around 8 million people aged between 20 and 80 in Australia? That means that there are approximately 3 super accounts per Aussie of working age AND millions of dollars of unclaimed and lost super in Australia!
The reason that this happens is that many of us have lost track of old super fund accounts that we once had, especially if we’ve moved jobs several times or didn’t nominate the same super fund from the start.
If you think you may have lost touch with a previous super fund, don’t worry. You can actually recover the money by doing a lost super search on the ATO website.
This can help you to track down any lost or missing super which you can then consolidate into your current super fund.
3. Consolidate Your Super Accounts
If you have received more than one super statement this year and are finding it hard to keep track of the extra sets of fees you’re paying, you’re not alone! But, we have some good news for you…
You can actually streamline your super and save yourself from the additional fees by consolidating your multiple super funds into one.
Merging your super money into one single account could save you THOUSANDS of dollars over time, enabling you to boost your retirement savings in the future.
By transferring all of your super into one fund you could also:
- Cut the additional costs and fees you’ve been paying;
- Reduce the amount of paperwork you receive; and
- More easily track your super balance over time.
Before you make the decision to consolidate all of your super accounts into one, ensure to check whether:
- Any of the funds have exit or withdrawal fees?
- You will have any insurance implications with any of the funds?
- Changes will impact how much your employer can contribute?
Don’t just base your decision on the fund with the highest balance left in it. Instead look for the one that will give you the best value for money and a good return on your investment.
4. Boost Your Balance with Additional Contributions
If you want to retire comfortably, your employer’s super contributions aren’t going to be enough to build your nest egg.
To achieve financial freedom by retirement you may need to boost the amount of super you have by making extra contributions. There are two ways that you can do this – through concessional and non-concessional contributions.
A) CONCESSIONAL CONTRIBUTIONS (BEFORE TAX) – Eg. Salary Sacrificing
When you hear of “concessional contributions” it simply relates to money deposited into your super fund from either yourself or your employer before tax has been taken out of your income.
These can be compulsory contributions from your employer such as your Superannuation Guarantee and salary sacrificed contributions, or they can be personal tax-deductible contributions.
For example, if you’re currently employed you can boost your super by asking your employer to pay an additional portion of your pre-tax salary as a contribution in to your super fund (salary sacrificing). That is, in addition to the traditional 9.5%.
Sure, sacrificing some of your salary now to put it into super will mean less in your pocket to spend this week. However, it will do wonders for your super in the long-term. This will provide you with much more value in the future, than the instant gratification you may receive today.
Boost Your Balance with Additional Contributions
B) NON-CONCESSIONAL CONTRIBUTIONS (AFTER-TAX)
If you choose to contribute to your super from after-tax dollars, you’re making a non-concessional super contribution. That is, you’re depositing your “personal” money into your super.
They are called after-tax super contributions because you have already paid tax on this income at your normal tax rate. This is why it is different from salary sacrificing because that happens before your income has been taxed.
5. Are you eligible for a Government co-contribution?
This is another way in which you can boost your super, and is often forgotten by many.
The federal government actually offers a co-contribution scheme where they donate a tax-free co-contribution into your super when you make a non-concessional (after-tax) contribution.
But there’s a catch – you do have to satisfy certain criteria.
- If you earn less than $52,697 per year (before tax) and make after-tax super contributions, you could be eligible for super contributions from the government.
- For those earning less than $37,697, the maximum amount that the government will co-contribute is $500 (based on 50c from the government for every $1 you contribute).
Note: The amount of the co-contribution reduces as your earnings increase and to receive the co-contribution from the government you will need to lodge a tax return for the year.
Lodging your tax return each year enables the government to work out how much you’re entitled to. If eligible, they will pay the co-contribution directly into your super fund.
So, there you have it, 5 things you can start doing now to BOOST your Superannuation fund.
In addition to what we have covered above, you can also set yourself up for a financially free retirement by growing a portfolio of investments over time.
Your portfolio could consist of shares, property and/or other investment classes which can help to provide you with a passive income during retirement.
This would help to complement your super fund so that you’re not putting all of your eggs in one basket.
If you’re interested in developing a clear pathway to fulfilling your financial goals – whether they be homeownership, travel and lifestyle, or early retirement, come in for a FREE Planning & Strategy Session, valued at $295.
This one-hour consultation could be one of the most valuable experiences of your life. So, what have you got to lose? Click here to ake action now, so you can relax and live a stress-free retirement.