The recent increases to concessional and non-concessional superannuation contribution caps are a blessing for retirement savings.
But did you know there are even more ways to maximise your super and pave the way for the retirement you deserve? Let’s dive into the strategies that go beyond the basics.
1. The power of salary sacrifice
Salary sacrificing means choosing to have a portion of your pre-tax income paid directly into your super fund.
Here’s why it’s so effective:
You lower your tax!
Contributions are made from your income before it’s taxed to potentially reduce your taxable income and therefore your tax bill.
Boost your super balance faster
Since super earnings are generally taxed at a favourable rate (maximum of 15%), sacrificing a bit of salary now can lead to significant growth over time.
Important note: Ensure the total amount of salary sacrificed contributions, plus your employer’s regular Super Guarantee payments, stay within the concessional contribution cap ($30,000 from July 2024).
2. Spousal contributions: sharing the ‘super’ love
If your spouse or partner has a low income or isn’t working, you might be able to boost their retirement savings with a spousal contribution.
Here’s how it works:
Eligibility
Your spouse’s income must be under a certain threshold (currently $40,000).
Tax break for you
You may be eligible for a tax offset of up to $540 if you make a spousal contribution.
Double boost
You help your partner build their super while potentially receiving a tax break yourself.
3. Government co-contributions - a helping hand
The government wants to encourage lower income earners to also save. If you earn under a certain amount (currently $57,016) and make personal after tax contributions to your super, the government may match some of those contributions.
Here’s the key…
- The maximum co-contribution is $500 if you contribute $1,000 or more.
- Be sure to check income thresholds and maximum co-contribution amounts as these are periodically
adjusted.
4. Catch up opportunities - the ‘bring forward’ rule
If you haven’t maxed out your non-concessional contributions in previous years, you might be able to use the ‘bring forward’ rule to make a larger lump sum contribution now.
Keep in mind there are eligibility criteria, such as your total super balance, that affect your eligibility to use this strategy. Strategic timing can be particularly useful if you’re expecting a large windfall, such as a business sale or an inheritance.
And for those considering downsizing…
If you’re 65 or over and sell your home, you could be eligible to make a one off, after tax contribution of up to $300,000 to your super regardless of standard caps. This is a specialised strategy, so professional advice is essential.
YOUR PERSONALISED SUPERCHARGING PLAN
Maximising super contributions is rarely a one-size-fits-all approach. The best combination of strategies depends on your income, age, super balance and your overall financial goals.
That’s where working with an accountant and your financial adviser becomes invaluable.
We can analyse your individual circumstances, ensure you’re taking advantage of all available opportunities and also keep you on top of any changes in regulations that could impact your super strategy.
The sooner you start the better…
