We all know that our employer has to make super guarantee payments for us, but do you know that there are all sorts of ways to save more into super.
It’s important that we think about super while we’re still working unless we never want to retire, you could think of it as a ‘do I want to be driving into the sunset on a Harley or cycling on a rackety old bike in my retirement’.
Let’s look at the ways to boost your retirement savings.
- Super Guarantee contributions
- Concessional contributions
- Non-concessional contributions
- Government contributions for low income earners
- Spouse contributions & tax offsets
If you work for an employer and earn more than $450 per month then your employer is legally obligated to pay your superannuation guarantee contributions (SGC) at least once a quarter. This is currently at 9.5% of your earnings.
SGC are treated as concessional contributions which basically means that they are pre-tax contributions. When you choose to make extra voluntary contributions into super from your pre-tax salary it is also treated as concessional contributions. This can be done through a salary sacrifice agreement with your employer or as a Member contribution directly into your fund. An added bonus of this is that you may also benefit from tax concessions on these extra super payments depending on your marginal tax rate.
Now there is a maximum amount of concessional contributions you can pay into super in a financial year. This is known as the concessional contributions cap and at this time it is $25,000 (this is a combination of your SGC and all voluntary contributions).
If you haven’t contributed the maximum amount you may be able to carry forward unused amounts to the next financial year – talk to us about restrictions with this.
Now if you want to contribute more to your super fund then you still can by using non-concessional contributions. This is where you pay money into your super from your net income or capital. If you’re approaching retirement it may be a good idea to do this to maximise your retirement savings. Each case is different though so we recommend you talk to your financial planner about this.
Our firm is partnered with Cleveland Financial Planners and they would be more than happy to have a chat with you to review your goals for your retirement.
If you earn $37000 or less a year and make concessional contributions into your super (this includes SGC) you could be entitled to an offset called the Low Income Superannuation Tax Offset (LISTO). If you’re entitled to this the amount will be paid into your super fund after you lodge your tax return.
Many super funds allow you to split your contributions – including SGC – with your spouse. If your spouse isn’t working or is earning a low income, you may also be entitled to a tax offset if you make additional contributions up to $3000 into their eligible super fund.