Many of us turn a bit of a blind eye to super. We know it’s there; we know it’s ours. But often, somewhere between switching jobs, moving overseas, being unemployed, or just general life stuff gets in the way, and we forget it’s there. Or worse, we lose track of it, or administration fees eat up all we have! When the time comes to start taking our superannuation seriously, we often just hope, or think, that it’ll be enough when the time comes.
Many Australians increase their super contributions in the last 10-15 years of their working lives. But whether you’re retiring next year, or in 30 years, it’s never too late to add to your super and maximize your balance. Making extra contributions as you near retirement can help boost your super balance, and benefit you in form of annual tax deductions, too! Read on to explore 8 ways you can boost your super savings.
Voluntary Tax Deductible Contributions
Making an after-tax contribution (known as a non-concessional contribution) is something you can do at any time and in any amount up to $110,000 per annum. Using this method, you can pay money directly into your super account from your bank. As a bonus – you can claim this money as a tax deduction on your tax return! Just make sure you contact your superfund and submit a Notice Of Intent To Claim A Tax Deduction form before you lodge your tax return.
You can contribute to your account easily through using BPay – Contact your super fund for your account details.
Find your Lost Super
Let’s be honest – when we were younger, most of us probably didn’t give a damn about super. As such, many of us have lost super from switching jobs and not being on top of how superannuation accounts. In fact, in 2021 The Reserve Bank estimated a massive $13.8 Billion in lost super, dating back to 1992.
If you’ve changed jobs, names, addresses, lived overseas over the years or changed jobs a handful of times, then there’s a good chance you may have lost track of some of your super. Check with the ATO to find your lost or unclaimed super if you fit into this category.
Consolidate Your Super
Similar to the above, if you have changed jobs over the years, there’s a chance you may have ended up with more than one super account. This means you could be paying fee’s on more than one account!
By consolidating your super into a single super fund, you can reduce the annual fees you pay, saving you more money for your retirement. Furthermore, if investing is your cup of tea, this would make it easier to manage your strategy.
The only downside to consolidating – in some cases, consolidation comes with an exit fee, taken straight from your super. Check with your super fund what their rules are before consolidating.
Did you know that if you’re a low to a middle-income earner who makes contributions to super, then the government can add up to $500 to your super fund? The Government Co-Contribution Scheme was set up in 2017 to assist low to middle-income earners save for their retirement. The amount you receive will depend on how much you contribute to your super, as well as what you earn for your annual income.
To be eligible for a super co-contribution from the government, generally, you must:
- Have a total income that’s less than $57,016
- Be in full or part-time work
- Be an Australian citizen or Permanent Resident on a temporary visa at any time during the financial year, and be under 70 years of age.
- Have made at least one voluntary tax-deductible contribution to your super
- Lodged your annual tax return
- Have a super balance below $1.7 million.
After you have lodged your tax return, the ATO will automatically work out the level of co-contribution it needs to pay to your Super.
A lot of people hear the word ‘sacrifice’ and get scared, thinking they will need to give something up. But sacrifice in terms of your super is something that will actually help you gain something in the long term. Salary sacrifice is where you choose to have some of your before-tax income paid into your super by your employer, on top of what they pay you under the Superannuation Guarantee.
To get started with salary sacrificing, you will need to confirm with your employer that they offer this kind of arrangement. From there, it’s a matter of simply asking your payroll managers to place a nominated amount of your income into your super instead, so long as it doesn’t exceed your concessional contributions cap of $27,500 per year.
Unfortunately, salary sacrificing does mean a reduction in your overall take-home pay. However, it also means your overall taxable income is reduced, which you can claim as a tax deduction at tax time!
Spouse contributions are contributions made on behalf of your partner from your after-tax income. This is a great option if you’re earning more than your partner, or if your partner is taking time off work and you would like to top up their retirement savings.
To be eligible, you will both need to be Australian residents with Tax File Numbers and be either married or in a de facto relationship. Additionally, you can claim a tax deduction on your annual tax return if you contribute up to $3,000, in which case, your partner’s annual income will need to be $37,000 or less.
Note: This option is only available to people aged 55 years and over.
If you’re at that age where the nest has become empty and you’re considering looking for a smaller home, then a downsizer might be for you! Selling the family home not only releases some equity that is built up but can also be used to make a voluntary contribution to your super.
Under the downsizer contribution rules, eligible people can contribute up to $300,000 into their super using the proceeds from the sale of their home. For couples, this can add up to an extra $600,000!
There are a lot of rules however regarding making a downsizer contribution. For one, the property being sold must have been your main residence and must be eligible for the main residence exemption for Capital Gains Tax (CGT). Therefore, an investment property, nor a caravan or houseboat are eligible.
If downsizing sounds like something you are considering, it’s important you familiarize yourself with the rules and seek financial advice.
Review Your Investments
Industry super funds allow you to choose from a variety of investment options and asset classes and allow you to switch your investments free of charge. If you’re still years (at least 10-15 years) off of retirement, then you have more time to ride out the market highs and lows. However, it’s important to speak with a financial advisor about your personal goals to get a better idea of which investment options will work best for you.
Want to learn more about boosting your super? Book a complimentary 20-minute super advice appointment with Auditax Accountants at 08 9358 5599!