Boost Your Super For The Lifestyle You’ve Always Wanted
Making smart choices when it comes to one’s super may create a healthy nest egg that can help individuals live the best life long after they’ve stopped working.
Even the slightest change in one’s money habits can go a long way in boosting super, subsequently creating more opportunities to increase tax savings which could then be helpful in further growing your retirement savings. This could mean the difference between a person living the lifestyle they’ve always wanted and struggling to make ends meet even during their older years.
Ways to boost super
For working individuals, contributions are assured under the Super Guarantee (SG). Employers are mandated by law to make quarterly contributions (9.5% of the employee’s salary) to a super fund chosen by the employee.
There are other options available to help augment an individual’s super:
Under an agreement with the employer, individuals allocate a portion of their pre-tax salary to be put into their super fund—on top of the 9.5% guaranteed employer contribution. This will reduce one’s take-home pay but potentially reduce taxable income and increase retirement savings.
Personal contributions can supplement a person’s (or their spouse’s) retirement savings. Considered non-concessional, personal contributions may be taken out of an individual’s after-tax salary, an inheritance, a pay rise or extra income and cannot go above the cap, which is $100,000 per year for those aged under 65.
The government can also provide assistance to low or middle-income earners making personal super contributions so long as they meet the eligibility requirements. This top up can amount to $500 and is tax-free.
Those with multiple super accounts will need to nominate the preferred fund while those who are already retired and no longer have an eligible super account may request a direct payment from the ATO.
Super contributions are going to be vital in helping you afford a comfortable standard of living in retirement. This is one very good reason for you to contribute more to your super.
Claim tax deductions before EOFY
The end of financial year can provide numerous opportunities for both businesses and individuals to get more out of their finances though increased tax savings. This is also a good time to boost retirement savings by making after-tax contributions to your super.
Individuals must be below 65 or 65 to 74 and have worked at least 40 hours for more than 30 consecutive days in the financial year to be able to make a personal deductible contribution.
Reduce income tax
Super contributions from post-tax wages or savings are tax deductible and will reduce taxable income. Instead of paying the marginal tax rate, which can be as much as 47%, super contributions are only taxed at 15%.
Claiming the tax deductible
To claim the super as a deductible, submit a valid ‘Notice of Intent’ form to the super fund. An acknowledgment form will be supplied. It’s important to start a pension or withdraw or rollover the money before completing the tax return.
Remember your contribution cap
Super contributions that are claimed as tax deductions will count towards your concessional cap, which is $25,000 for the 2018/19 financial year. These are in addition to employer contributions–salary sacrifice and superannuation guarantee–that are counted towards the cap.
Taking the right steps towards a healthy retirement fund will require taking advantage of all available options so you can live your best life. For more resources please go to the following:
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IMPORTANT INFORMATION: This blog has been prepared by Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licences (No. 233209), located at Level 3, 50-56 Sanders St, Upper Mt Gravatt Q 4122. The information and opinions contained in this fact sheet are general information only and is not intended to represent specific personal advice (Accounting, taxation, financial, insurance or credit). No individuals personal circumstances have been taken into consideration for the preparation of this material. Any individual making a decision to buy, sell or hold any particular financial product should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to purchase, sell or hold any particular financial product. Modoras Pty. Ltd. recommends that no financial product or financial service be acquired or disposed of or financial strategy adopted without you first obtaining professional personal financial advice suitable and appropriate to your own personal needs, objectives, goals and circumstances. Information, forecasts and opinions contained in this fact sheet can change without notice. Modoras Pty. Ltd. does not guarantee the accuracy of the information at any particular time. Although care has been exercised in compiling the information contained within, Modoras Pty. Ltd. does not warrant that the articles within are free from errors, inaccuracies or omissions. To the extent permissible by law, neither Modoras Pty. Ltd. nor its employees, representatives or agents (including associated and affiliated companies) accept liability for loss or damages incurred as a result of a person acting in reliance of this publication.