More Ways To Contribute To Your Super

As we get older, we are faced with the reality of funding our retirement, and to many this thought can be overwhelming and daunting. So, this is an article that gives you a few ideas on how you can boost your retirement savings.

There are rules when making contributions to super, but you are not just limited to paying your super guarantee (which is soon to be 10% of your gross income), nor are you just limited to the concessional contribution which is capped to $25,000.00.

For example, there is the catch up rule… I really like this one: if you have not maximized your contributions cap in the past 5 years you can, So long as you are under 67 and your super balance is less than $500K you can use the “catch up” rule and contribute to the maximum concessional contribution: Case study: Mrs Smith has savings of $55,000 and has only paid $10,000 the past 4 years, she plans to contribute in 2021/2022 financial year $55,000 + her normal SG of $10,000 to her super, knowing her concessional cap for this year has also increased to $27500.00. In doing this her tax will be adjusted for those years as well. Quick disclaimer – you must check your previous contributions to ensure you don’t go over.

If you have paid off your mortgage, why not make more non- concessional contributions to super? This is paying with dollars that has already paid tax so once in super the return of investment is tax free. The good news is you can invest up to $100,000.00 as a non- concessional contribution. I am watching clients of mine successfully boosting their super with what they use to pay toward their mortgage, now funding their super.

Those who have sold a business, or an asset or come into an inheritance may also consider the bring it forward rule, meaning you can pay up to $300,000 into super as a non-concessional contribution, using this years’ non-concessional cap and bringing forward the next 2 years.

If you are over 65 and you sell your main residence you can use the “Downsizer contribution” rule. Say for example you and your partner sell your family home as you become empty nesters and you sell your house for $1.2mill and buy a $500K property to retire in, you can both contribute up to $300K each into your super (even if the property was in only one of your names).

I am a believer in setting goals as this will help you remain motivated to put money toward your future. How much money? Well that all depends on the kind of lifestyle you are currently living and how much you think you could live off at retirement. 

Putting money into super is only part of the puzzle – you want to ensure it is well invested to meet your goals and objectives as well. Keep an eye out for another article on the topic of investing your super and retirement planning.

Disclaimer: This article is general in nature and has not considered your personal circumstances. We recommend you seek financial advice from a licensed adviser.