WITH life expectancy climbing and the government tightening its belt on aged pension concessions, it’s never been more important to make sure your super is in good shape.
And we’re not just talking to those approaching retirement.
Younger people should keep in mind that the current (relatively generous) aged pension and associated concessions will likely look very different by the time they reach retirement age.
This means that having a healthy stash of super will be even more critical to enjoying a comfortable retirement.
And younger people are in the box seat because they have time on their side…a little extra contribution today will make a massive difference to a retirement payout.
We know that super isn’t the sexiest subject, but the shifting landscape means that it’s one you need to be across. So to help you get prepared for a smooth ride into the sunset, here are four ways to supercharge your retirement savings.
CHOOSE THE RIGHT FUND
If you haven’t been proactive about where your money is invested, a big chunk of it could be sitting in a fund that’s not appropriate for your situation, or worse, is actually eating it up through excessive fees or poor investments.
Take the time to compare your fund against the market, focusing on fees and the range of investment options available to meet your long-term objectives.
And don’t forget to compare the insurance benefits provided by each fund as well.
Many super funds automatically offer members some combination of life, disability and income protection cover.
Two websites to look at are Rate City and superratings.com.au for benchmarking your fund.
CONSOLIDATE YOUR ACCOUNTS
People who have switched jobs regularly or haven’t paid too much attention to super can easily end up with multiple super accounts. This means multiple sets of fees eating away at your money.
So once you’ve settled on a super fund you’re happy with, it usually makes sense to consolidate money from any other accounts you may have into the main one.
You can get a full view of every super account held in your name, and kick off the consolidation process, by linking your myGov account to the Australian Taxation Office’s (ATO) online services.
MAXIMISE YOUR CONTRIBUTIONS
Salary sacrificing allows you to benefit from tax concessions by kicking a portion of your pre-tax salary into super, so see if you can afford to forgo some of your salary each month and send it to super.
You can make pre-tax contributions up to the current concessional contribution cap of $30,000 per year (this may be higher depending on your age and situation), and benefit from paying 15 per cent tax versus whatever your marginal tax rate is.
It’s also possible to make after-tax contributions to super to bolster your balance, up to the non-concessional contribution cap of $180,000 (again, there are certain situations where this may be higher).
As tax has already been paid on this money, no further tax will be withheld, and you could also benefit from reduced taxes on earnings in super.
Low to middle income earners may be eligible for a government co-contribution when making after-tax contributions, up to a maximum value of $500.
And if your spouse is a low-income earner, there are tax offsets available for making a contribution to their super, too.
TALK TO A PROFESSIONAL
Finally, super can be a complex and challenging area to get your head around, with constantly shifting goalposts, and many strategies and considerations we haven’t covered here.
So if you’re keen to supercharge your retirement savings, but aren’t sure how to go about it, then speaking to a financial adviser can be a good way to go.
Of course, you’ll need to make sure you’re getting a fair deal, but ultimately the money saved in the long run should more than offset the fees they charge.
Then you can enjoy your improved life expectancy in comfort.