3 ways to make the most of your super
Planning
24 January, 2018 - 09:52 AM GMT

3 ways to make the most of your super

Have you checked your superannuation lately? It’s worth keeping an eye on your investment as the more money both you and your employer contribute, the more time your savings has to grow. This means you can enjoy your retirement in comfort.

Many of us tend to ‘set and forget’ our superannuation. But it is worth checking in regularly to ensure you are always getting the best deal (and that you’re always being paid what you are owed). There is currently more than $14 billion in lost super in Australia  so you’d be crazy not to.

 

Here are three ways to maximise your superannuation:

 

#1 Make voluntary contributions

Over the period of your working life, by law your employer must pay 9.5% of your salary into a super fund. This is known as the Super Guarantee and this is likely to increase to 12% in the future.

However, for many of us, this isn’t enough to prepare for retirement. So, there is also the option to voluntarily contribute to your super. This significantly increases the amount of super you have once you reach the age of retirement. Remember the more you save, the earlier you can stop working.

There are several reasons why you should increase your super:

  • The inevitable increase of the cost of living
  • If you are eligible, then government support such as age pension may not be enough to live on in retirement
  • You may be eligible for extra government contributions

If you want to contribute extra money to your superannuation, there are several options.

  1. Salary sacrifice: you can choose to ‘sacrifice’ a portion of your salary to your super which counts towards your concessional contributions cap. This amount is paid through your employer directly into your super account and is only taxed 15% (as long as your concessional cap is not exceeded). Be aware that concessional caps are changing in the new financial year.
  2. After-tax super contributions: you can deposit money directly into your super but you will not receive a ‘tax break’ on these contributions.
  3. Self-employment: if you are self-employed then you are not required to make super contributions to a fund. However, it is worth looking into options such as being able to claim a tax deduction when you contribute to your superannuation and be aware that  there is a limit to your contribution.

 

#2 Consolidate your super

It is crazy to have more than one superannuation fund so consolidate your accounts. You’re just doubling up on fees and admin. Worst of all you’re increasing the chance of losing track of money owed to you. To find lost or unclaimed super visit the ATO

According to research conducted for the Association of Superannuation Funds of Australia, the main reason why so many Aussies haven’t consolidated their super accounts is because they simply haven’t had the opportunity to do so. And one in five Aussies aren’t sure of what the process entails. But it’s much easier than you think!

Do some research and then speak to the superannuation fund you want to stick with. Then inform your employer and rollover your super to one account.

 

#3 Get advice

It’s crucial that you receive the appropriate information when it comes to your superannuation. Getting the right advice now could pay off significantly for your financial future and make a massive difference when the time comes for retirement. Of course, there are many underlying factors that need to be considered before you make any drastic moves.

Always consult with a financial adviser or your trusted financial expert who can assist you to make the right decisions.

 

Note: There are changes coming to super on 1st July 2017 that will affect super contributions and the way they are taxed. Visit ASIC MoneySmart for more information.