Superannuation, or simply super, is a regular payment or contribution made into a fund or account for your future pension. It's usually an organisational pension programme, and the amount is deducted from your salary and paid to your super account. If you are self-employed, you can also set aside a certain amount towards your super account. Essentially, your super fund invests the amount, earning returns that help boost your retirement savings. Super is one of the top solutions to save for your retirement, and depending on the retirement lifestyle you have planned for yourself, you can improve or boost your super to increase your retirement returns. Here are some tips on how to do this.
Salary sacrifices are some of the most practical solutions to boosting your super. They entail agreements with your employer to channel a given amount of your before-tax income to your super account. If you are eligible for any bonuses at your workplace, you can also choose to have them paid to your super fund instead. This strategy comes with both pros and cons. Besides helping you boost your super, salary sacrificing reduces the amount of taxable salary, which could mean paying less tax. On the downside, however, your take-home pay is also reduced, which means you may have to adjust your current lifestyle if you don't have other income sources.
Consolidate Your Super Accounts
If you have worked for several organisations over the years, chances are you have multiple super funds or accounts. It's crucial to track down these super accounts and consolidate them. Doing this makes it easier to manage your super. What's more, there's usually less admin and paperwork when dealing with a consolidated super account. Also, you don't have to worry about different management fees from several accounts. However, consolidation also comes with some downsides, and you must weigh them against the benefits. For instance, you may be charged termination or exit fees by withdrawing from some super funds. Some of your preservation and tax components may also be affected, and you risk losing other benefits you currently have, such as insurance. Speak to a financial advisor if you are not sure whether consolidation is the right solution for you.
Voluntary and Spouse Contributions
Do you have any other savings or income such as inheritance or asset sales? Making voluntary contributions of such savings into your super is also an excellent way to boost the super. If you earn more than your spouse or vice versa, you can also choose to contribute to their super fund. Spouse contributions also come with tax benefits. Depending on how much they earn, you can claim a tax offset through your tax returns.
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15 June 2021
Planning for your financial future can be tricky. With so many outgoings to juggle, the typical person finds it difficult to keep track of their spending. Learning some basic financial skills, like how to make a budget and how to invest for the future, can make a huge difference to your long-term financial health. Take a look at our posts to find out how you can save money without making big sacrifices to your way of life. Learn about essential aspects of finance, such as retirement planning. Whether your goal is to get out of debt or save for a rainy day, we can help you achieve it.