Make the most of your Super

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Make the most of your Super

Superannuation is one of the most tax effective ways to save for your future. So here are a few things you may want to consider to help you make the most of your super.

1.    Consolidate your accounts

If you have multiple super accounts from changing jobs over the years, you may want to think about consolidating them into one. This could save you money in fees and charges, and a larger combined account balance may also generate a larger return. It also means there's less paperwork for you to worry about.

Before you consolidate your super there's a few things you should consider, such as:

  • Which is the right fund for your needs?
  • Are there any termination fees?
  • Can you get the same level of insurance?
  • Can your employer contribute to your preferred fund?

2.    Make extra contributions

Your employer contributes 9.5% of your salary towards your super – but this alone may not be enough to give you the kind of retirement you'd like to have. Contributing to your super now can help you have a more comfortable retirement. And the good news is, your contributions are taxed at a lower rate.

There are a few different ways you can make personal contributions to your superannuation. These include:

Before-tax contributions (AKA concessional contributions)

Salary sacrifice is one way you can make a before-tax contribution to your super. This is where you 'sacrifice' some of your salary and put it towards your super. It can help you to save on tax by:

  • reducing your taxable income, which means you could end up paying less tax and, depending on how much you contribute, you could even drop down a tax bracket
  • allowing you to benefit from the lower tax rate on your super contributions, which are taxed at a maximum of 15%.

Before-tax contributions are limited to $30,000 per person per year (or $35,000 if you are over 50), including the superannuation guarantee (SG) contributions made by your employer.

After-tax contributions (AKA non-concessional contributions)

After-tax contributions are made with your personal money, and don't receive any tax deductions. However, there are limits to how much you can contribute without paying tax – from 1 July 2014 onwards, you can make up to $180,000 (or $540,000 over a three year period if you are under age 65) in after-tax contributions per person, per financial year.

Government co-contributions

If you earn less than $49,488 per year (before tax) and make after-tax super contributions, you are eligible to get matching contributions from the government (known as a government co-contribution).

Contribute for your spouse

If you have a non-working or low income earning spouse, you could contribute to super on their behalf and receive a generous tax rebate.

3.    Invest your super wisely

It's important to understand where and how your super is invested. For example, is your super invested in line with your personal circumstances and objectives - like your risk profile, and how long until you plan to retire?

It's important to remember you can choose the way your super is invested – you don't have to invest in the default fund. If your super is mainly in cash or other conservative investments you may be missing out on higher returns that could be generated from a larger allocation to growth investments, such as shares. If you have a longer time over which to invest you may like to consider more growth-oriented investments.

There are a lot of things to think about when it comes to your super. If you're thinking about retiring, you might find it helpful to talk to a financial planner about how to make the most of your super.

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. In referring members to Bridges, Credit Union Australia Limited (CUA) ABN 44 087 650 959 AFSL 238317 does not accept liability or responsibility for any act or omission or advice provided by Bridges or its Authorised Representatives. Bridges is part of the IOOF group.

Feb 26, 2019 | Found in: social,
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