6 ways to grow your super balance
When it comes to superannuation, some Australians can have a ‘set and forget’ approach. After all, if your employer is contributing 10.5% of your earnings, there’s not much more you need to do? Wrong. Making additional contributions to your super account can make a big difference to your retirement and can set you up for life.
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There are lots of ways you can grow your super now – it’s never too early or too late - here are our top 6 ways.
1. Salary sacrifice
When you set up a salary sacrifice arrangement with your employer, you pay or ‘sacrifice’ some of your before tax salary into your super account. It can be a very simple way to boost your super, as well as reduce your taxable income, since the money goes into your super before it gets a chance to be taxed at your marginal rate.
Use our Superannuation contributions calculator to see how it can work for you.
2. Tax deductible contributions
If you’re not able to salary sacrifice, or would just rather do it yourself, you can make a tax-deductible contribution to your super, and then claim the tax deduction. Typically you would need to notify your fund that you intend to claim the deduction. Your fund then deducts tax from your contribution, and the contribution amount no longer forms a part of your taxable income. This means tax savings could be available to you, as these contributions are normally taxed at just 15%. Additional tax may apply if you’re a high income earner or you exceed the concessional contributions cap.
3. Voluntary after tax contributions
You can make after-tax contributions (also known as personal contributions) on a regular or one-off basis, whatever suits. It could be a good way to inject more money into your super if you come into extra cash, potentially from a bonus or your tax return.
Generally you can make contributions via BPAY, direct debit, or payroll deductions through your employer. Be mindful that there are some caps which limit the amount you can contribute. Find out more about contribution caps.
4. Spouse contributions
While it’s not directly boosting your own super, you can boost the super balance of your spouse. Your partner may have taken time off, whether it’s to raise children, study or something else, which may have caused their super to fall behind. You can make a spouse contribution to their super account. If your partner is a low income earner, you may also be eligible for a tax offset of up to $540 per year.
5. Consolidating your super
If you’ve had more than one job, there’s a good chance you could have multiple super accounts. It’s worth looking into consolidating your super as paying fees to multiple funds could set you back thousands of dollars over your working life. Other benefits of consolidating include:
- Take control of and grow your super by having your contributions go into one fund
- Choose just one investment strategy that suits your retirement goals and risk profile
- Keep track of contributions and contribution caps more easily
- Less paperwork and fewer numbers and passwords to remember
Before consolidating your super, consider the potential loss of insurance and other benefits that you may have in your other funds. Also consider where your future employer contributions will be paid.
6. Super health check
Lastly, to make sure your super fund is working for you, it’s a good idea to do a super health check at least once a year. It’s important to ask these questions:
- How is my fund performing?
- Do they have lower fees?
- Am I in the right investment option for my life stage?
- What insurance cover do I have in any super?
Once you have answered these questions, you can decide whether you are with the right fund and your balance is heading in the right direction with higher investment returns and lower fees, or whether it’s time to change.
To become a member of Australian Retirement Trust, you can join online in just 5 minutes.
Before joining Australian Retirement Trust, consider the potential loss of insurance and other benefits that you may have in your other funds. The information contained on this website is general information only and does not take into account your individual objectives, financial circumstances or needs. You should consider your own objectives, financial circumstances and needs, before making a decision about the financial product. Also, think about where your future employer contributions will be paid. You should consider the Product Disclosure Statement and Target Market Determination before deciding whether to acquire, or continue to hold the product. For more information or financial advice from Australian Retirement Trust, call us on 13 11 84.