Boosting your savings
Are you on track to reach your retirement goal? If not, it's never too late to take action and boost your super savings. Find out more about your options and the right strategy to help you increase your retirement savings, even if you're close to retirement.
A critical step in planning for retirement is knowing how much money you need to live your desired retirement lifestyle. Once you have a goal, you can use the Retirement Income Simulator to check how you're tracking.
If you're on track, great! If not, it's never too late to take action and boost your super savings.
There are several options to consider depending on your income, circumstances and how long you have until you plan to retire.
Regular additional contributions are a great way to boost your super balance. These can be made:
- before tax, known as salary sacrifice
- after tax, either as a payroll deduction or regular BPAY from your bank account.
You can also make one-off after-tax contributions using BPAY or you can mail us a cheque and completed Voluntary contribution form.
If you are part of a couple, you may want to consider making spouse contributions. These are designed to help build super for partners on lower incomes or who aren't working.
Annual contribution caps and restrictions apply, and there are different tax implications for each type of contribution.
If your total superannuation balance is below $500,000 (on 30 June of the previous financial year) you may be able to take advantage of the 'carry forward' rule.
So how does it work?
Each financial year you can make before-tax (concessional) contributions up to your cap, which is currently $27,500. If you don't make before-tax contributions to your cap, you can carry forward this unused amount on a rolling basis for five years.
Effectively you're 'catching up' on the full amount you could have contributed in previous years.
The first year you will be entitled to carry forward unused amounts is the 2019-20 financial year. Unused amounts expire after five years.
Usually, any additional contributions above your cap are taxed at a higher rate, but catch-up contributions will be taxed at the concessional 15% in your super account.
Cassandra is a 46-year-old earning $100,000 per year. She has a superannuation balance of $400,000.
In 2018-19, Cassandra had a total of $10,000 in before-tax contributions.This is $15,000 below the maximum cap.
In 2019-20, Cassandra has the ability to contribute $40,000 into superannuation of which $25,000 is the amount allowed under the annual concessional cap and $15,000 is her unused amount from the previous year that has been carried forward.
Many Australians downsize their home when they retire, or in the lead up to retiring, motivated by a lower maintenance lifestyle or to make a sea or tree change. There are pros and cons to weigh up but if you do decide to make the move, you may be able to take advantage of the Federal Government's downsizer contribution.
If you’re 65 years or older, and meet the eligibility requirements, you may be able to make a downsizer contribution of up to $300,000 to your super from the proceeds of your home.
A contribution of up to $300,000 can be made by each owner but the total can’t exceed the proceeds of the sale. You also have the option of splitting the amount between your accounts.
A couple sell their home for $800,000.
- Each partner can add up to $300,000 to their super, to a total of $600,000.
- The remaining $200,000 cannot be contributed through the downsizer measure.
A couple sell their home for $400,000.
- They can contribute a maximum of $300,000 each, and can’t exceed $400,000.
- They can choose to contribute $200,000 each, or split it, for example $300,000 to one account and $100,000 to the other.
You can make the downsizer contribution whether you’re still working or already retired, as long as you meet the eligibility criteria.
Changing your investment option
Depending on how long you have until you plan to retire, you may want to consider changing your investment option. It's always a good idea to speak to our team before making an investment switch, especially if you're nearing retirement, to ensure you're choosing the investment option that's right for you.
Consolidating your super into a single account
If you've changed jobs a few times or worked as a freelancer, you may have super in multiple accounts. Each super account will likely have administration and investment fees attached to it, which means you could be paying fees for multiple accounts unnecessarily. Over time, fees and premiums will eat away at your savings, so it's worth taking the time to consolidate all your super into a single account so you can stop paying extra fees. We can also help you locate any lost or unclaimed super you may have.
Talk to us about boosting your super savings
The right strategy to boost your super isn't one size fits all. There's a lot to consider, including your personal circumstances, work situation and tax implications. Whether you have questions about a strategy to boost your super or want to discuss a more comprehensive retirement solution, our team of Financial Planners is here to help. Get started by calling 1800 640 886.