It’s likely you’ll spend more than a quarter of your life in retirement. But will you be able to afford your dreams of travel, golfing and spoiling the grandkids?

By starting now and making even small changes, you can get closer to the retirement you’d like. Here are five effective strategies to help you build a bigger super balance.

Give me the main points

  • Super is an investment intended to use in retirement.
  • If you're an employee, the most regular source of super contributions may come from an employer.
  • You could have several super funds – consider the benefit of rolling it all into one to reduce your fees.
  • Manage tax – consider the benefits of salary sacrificing additional contributions to super from your pre-tax income.
  • You may be eligible to receive additional contributions from the Government if you make after-tax super contributions.

What is superannuation?

Superannuation is an investment to provide you with capital to fund your retirement. Depending on the type of fund you invest your money in, there are generally a range of investment options you can choose from. Many of these investment types are similar to those that you can hold in your own name - such as units in a managed fund, or shares for example. The benefit of superannuation is that rate of tax that is paid on your investment earnings is a maximum of 15%, rather than your marginal tax rate which is usually higher.

Contributions to your super account may come from a number of sources, such as from an employer, your own personal savings, or even from a spouse (eligibility criteria applies). For most people who are employees, the most regular source of contributions to super are those from your employer. If you’re self-employed or you aren’t currently working, you may still be eligible to contribute to super. There may even be tax benefits available if you do so.

Keep your super in one super fund

If you’ve moved jobs or done casual work over the years, you might have money in several super funds. Getting all your super in one place is a good starting point.

With one super account, you won’t be doubling up on fees or insurance premiums – which can eat away small balances. With fewer funds to manage, it’ll be easier to keep track of your retirement savings.

Before you consolidate your funds or close any of your existing accounts, it’s important to understand whether you’re losing access to any important benefits - such an insurance policies with superior terms, or one that you may have put in place at a good premium rate, or without any pre-existing conditions.

Try salary sacrificing

You may be able to reduce tax and boost your super balance through salary sacrifice. Salary sacrifice is an agreement with your employer to contribute a certain amount from your pre-tax salary or future bonus entitlements, into super instead of receiving them in cash. Instead of these amounts being taxed at your marginal tax rate, they’re generally taxed at the concessional rate of up to 15%. For example, if you earn $95,000 a year, you could save up to 24c in every dollar sacrificed.

If you’re a high income earner, with total income in 2016/17 more than $300,000, you’ll be taxed an additional 15% on your concessional contributions. Thirty per cent tax would still be lower than your marginal tax rate of 49% (including Medicare Levy and the Budget Repair Levy).

Currently the concessional cap for the 2016/17 financial year is:


Annual Cap

48 or under on 30 June 2016


49 or over on 30 June 2016


From 1 July 2017, the concessional cap will reduce to $25,000 for everyone, regardless of age.

Make after-tax super contributions

Perhaps you’ve received an inheritance, a bonus, or sold an asset. Use these funds to grow your retirement savings. Consider making an after-tax (or ‘non-concessional’) contribution to your super.

The Government may also make a contribution on your behalf if you earn less than $51,021 a year (before tax) and meet other eligibility criteria.

If you’re eligible, your after-tax super contributions will be matched by a Government co-contribution of up to $500. For example, if you earn $36,021 or less and contribute $1000, you’ll receive $500 extra from the government – a 50% return. The co-contribution decreases the more you earn.

You can make after-tax contributions at any time before you turn 65. After 65, you’ll need to meet a ‘work test’ each financial year you wish to make contributions (you’ll need to have worked 40 hours over a consecutive 30 day period). You can’t make non-concessional contributions once you’re 75.

Top up your spouse’s super

Is your spouse working part-time, earning a low income or currently not working (but not retired)? If so, you may both be able to benefit by making a ‘spouse contribution’ to their super account. In the 2016/17 financial year, if your spouse's assessable income is less than $13,800 and you make a spouse contribution on their behalf into their super account, you’ll receive a tax offset.

If your spouse’s income is less than $10,800, you’ll be entitled to the maximum offset of $540. The available offset will reduce if your income is over $10,800. This means if your spouse earns less than $10,800, you could make a $3,000 spouse contribution and get the benefit of the maximum offset amount of $540.

Seek professional advice

Remember the tax and super systems are complex and subject to change, and everyone’s financial situation is different. So before making any major changes make sure you speak to your financial planner.

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