Don’t be discouraged by superannuation – there are ways to make it work for you. By taking advantage of “super hacks” like salary sacrificing, making additional contributions, and consolidating multiple super accounts, you can boost your super balance and improve your retirement prospects. Even a modest super balance can make a big difference in retirement, so it’s worth taking the time to learn about the strategies and tools available to you. Remember that self-education is key – the more you know about superannuation and your options, the better off you’ll be in the long run.
For every $100,000 saved in superannuation, you can expect these funds to generate a return of 6%, or $6,000, a year. When this is paid out as a pension, it equates to $500 a month tax-free. Of course, this is doubled if both you and your partner have $100,000 each in super. Depending on your overall financial situation, this can be paid in addition to you receiving a full-age pension.
Here are six super hacks to help you maximise your super balance:
Hack 1: Consolidate your accounts
Consolidate all your superannuation accounts into one account best suited to your needs. The Australian Tax Office says some 6 million Australians have multiple super accounts, wasting millions of dollars in duplicated charges.
These unnecessary fees will needlessly erode your super balance. Consolidating multiple accounts is easy. Simply log on to the ATO’s website and with one click, choose one account to accept all your funds. This alone could save you thousands of dollars.
Hack 2: Review your super contributions.
Check your employer is contributing the right amount to superannuation from your wages each week. If you believe there is a shortfall, contact the ATO to investigate on your behalf.
Hack 3: Take advantage of co-contributions
If you earn less than $57,016 a year, consider making additional after-tax super contributions to take advantage of a matching contribution from the government, called a co-contribution. Under this scheme, you can contribute up to $1,000 of after-tax money and receive a maximum co-contribution of $500. This is a 50 % return on your investment.
When you lodge your tax return, the government will determine your entitlement and if eligible, will pay the co-contribution directly to your fund. You don’t need to do anything more than make the original contribution from after-tax savings.
Hack 4: Benefit from spouse contributions
Review whether you can benefit from making additional contributions to your partner’s super. If you do make contributions to your partner’s super and they are on a low income or not working, you may be able to claim a tax offset of up to $540 a year.
Hack 5: Contribute any long-term savings to super
You must follow rules on how much and when to contribute to your super, but by saving in superannuation, your money will be held in a tax-friendly environment.
During accumulation, ATO taxes income and capital growth at 15%, lower than marginal tax rate. Later, in pension mode, superannuation becomes a tax haven, with assets held within a tax-free environment.
And, if you are thinking of selling your family home to downsize to a smaller property, you can take advantage of the downsizer contribution rules, enabling you and your partner to contribute up to $300,000 each to superannuation. This one step can make a significant boost to your superannuation balance just when you need it, as you enter retirement.
Hack 6: Seek professional guidance
Looking to boost your retirement savings? Consider exploring some super hacks to maximise your nest egg. However, bear in mind that there are many rules surrounding superannuation, so it’s essential to seek expert advice from a qualified financial adviser or accountant. Whether you’re just starting out or nearing retirement, any additional contributions to your super can make a significant difference to your quality of life in retirement.
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