How to Increase Retirement Savings
To realise one’s lifestyle potential, it’s important to get started on building a healthy nest egg. Learn how to increase retirement savings with the following tips.
It’s possible to enjoy the lifestyle one has envisioned and live comfortably in old age–by taking the steps to increase retirement savings.
Despite concerns of many about not having enough money to tide them over for life, a Grattan Institute study that retirees will be able to live comfortably–meaning they will have plenty of money–once they leave the workforce. These individuals may experience a comfortable retirement lifestyle thanks to a combination of mandated super contributions, non-super savings, and the Age Pension. They can expect at least 91% of their pre-retirement income.
Today’s lifestyle will dictate tomorrow’s retirement
For individuals planning to retire early or are currently trying to catch up, one thing’s for certain: the quality of retirement will depend on the quality of lifestyle.
How much one spends today–and expect to spend in the future–will determine how much one has to save to prepare for the best life possible.
Retiring with a healthy nest egg starts with enhancing your money habits today.
How to boost retirement savings
Claim a tax deduction
Super contributions taken from after-tax income are tax deductible. Individuals can claim for this which means it’s possible to reduce taxable income for the financial year and potentially pay less tax.
Sacrifice part of your salary
Salary sacrificing can be a tax-effective way to grow your super. Employees may arrange for their employer to allocate a portion of pre-tax income to a super fund. By ‘sacrificing’ part of the salary one potentially pays less tax than if they’d received it as a take-home pay.
Make personal contributions
What’s left from after-tax income can be poured into a retirement fund. This personal contribution allows individuals to benefit from the low tax rate which may be lower than what one would have to pay if you put the money in investments other than super.
Before making personal contributions, remember that since it’s considered non-concessional, it must not exceed the cap ($100,000 to $300,000 in 2018/19) because there may be penalties to pay.
Get a Federal top-up
For low-income earners—those making less than $52,697 in the 2018/2019 financial year, the Government may provide co-contributions as much as $500. The maximum amount is only available if one contributes $1,000 and does not earn more than $37,697 per annum.
Reduce tax by contributing to spouse’s super
A tax offset is available for individuals who make after-tax contributions to their spouse’s fund. This applies to those whose spouse is unemployed or earns less than $37,000 or less per annum.
Making the right financial decisions will be vital in having peace of mind during retirement. But while many are hoping to retire early and enjoy the fruits of their labour, not a lot of people are taking the right steps. But for those that do, millennials for example, these 4 things have been effective in helping boost their retirement funds:
- Having a savings account
- Little to no credit card debt
- Using windfall to pay off debt or save
- Putting more income toward retirement
Are you on track to retire when you want to?
Working alongside a professional financial planner will help you make the most out of your super contributions.
Find out more ways to boost your retirement nest egg by talking to us. Schedule a consult here.
IMPORTANT INFORMATION: This blog has been prepared by Modoras Pty. Ltd. ABN 86 068 034 908 an Australian Financial Services and Credit Licences (Number 233209). The information and opinions contained in this presentation is 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 any investment or borrowing decisions should make their own assessment taking into account their own particular circumstances. The information and opinions herein do not constitute any recommendation to borrow funds or purchase, sell or hold any particular investment. Modoras Pty Ltd recommends that no financial product or financial service be acquired or disposed of, credit contract entered into 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 blog may 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.