Super is the centrepiece of retirement planning but all too often, it is left to linger in the background instead of being given the attention it deserves. After all, with your money and retirement lifestyle at stake, it’s worth finding ways to streamline your super and to take advantage of opportunities to make it work harder for you.
1. Maximise tax advantages
Recent changes to tax incentives have created potential opportunities to give your super a real boost.
As of July 2017, employees can make tax-deductible (concessional) super contributions on top of the compulsory contributions their employers make. This effectively means that the government is making a potentially huge contribution to your retirement benefits through the tax system — an opportunity simply too big to ignore.
Another way for employees to use the tax system to enhance their super is through salary sacrificing. This is a formal arrangement you make with your employer to direct some of your pre-tax salary toward super contributions, thereby reducing your salary for tax purposes.
Choosing whether you should make deductible contributions or salary sacrifice will depend on your individual circumstances, so consult a financial adviser to help make the right choice.
2. Advantages of after-tax contributions
While making concessional contributions is a great way to boost your super using the tax system, there are limits on the level of contributions you can make each year and still receive concessional treatment. If you are approaching retirement, the concessional contribution limit may not be sufficient.
Fortunately, you can also make after-tax (non-concessional) contributions within the non-concessional contribution cap. While these contributions don’t benefit from tax deductibility, they do have the significant advantage of avoiding the 15 per cent contributions tax, so that the full value of your contribution reaches your superannuation account and you may be able to take advantage of the concessional tax on earnings.
Consult a financial adviser to help determine how you can best balance your pre and post-tax super contributions, and stay within the limits for optimal tax efficiency.
3. Consolidate and save
If your super is spread across multiple accounts due to changes in employment over the years, you could be frittering away valuable retirement savings in unnecessary costs. You pay administration and other fees on each super account you have, and may also have multiple insurance premiums deducted from those accounts.
The solution is to consolidate your super into one fund. To do this, you first need to find out how much you have in each account, and identify if you have any lost or forgotten super accounts.
4. Access government support
If you are a low or middle-income earner, you may be able to make non-concessional contributions of up to $1000, and qualify for a government co-contribution of up to $500 toward your super. This scheme is currently available to eligible individuals who earns less than $52,698 (for the 2018-2019 financial year).
Another option is the spouse contribution scheme, which allows you to contribute up to $3000 to your spouse’s super account and receive a tax rebate of 18 per cent (up to a maximum $540) if your eligible spouse earns less than $37,000. The rebate amount tapers off if your spouse earns more than $37,000 and they become ineligible once they reach $40,000.
5. Review your insurance in super
Your super may include insurance cover, but is the amount appropriate for your needs?
As you go through stages of life, your cover needs can vary dramatically and in later years, you may end up with more insurance than you need. The only way to determine the right level of cover is to have a proper insurance needs analysis done.
Engage a qualified financial planner to perform this analysis for you and make sure you have the appropriate level of insurance for your needs.
Take the next step
To discuss your financial situation, make an appointment with a Bridges financial planner. We have an established alliance with Bridges, to provide our customers with financial advice. Bridges has been helping Australians with financial advice for 30 years. A Bridges financial planner will develop a plan specifically for you; one that’s tailored to your needs and circumstances to help you achieve your goals. To make an appointment with a Bridges financial planner, call 1300 361 555 or email email@example.com. The initial consultation is complimentary and obligation free.
Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837.
This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent.
Examples are illustrative only and are subject to the assumptions and qualifications disclosed.
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In referring customers to Bridges, Geelong Bank does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives.