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Super strategies
Additional contributions
Working out how much you’ll need to contribute to super to ensure a comfortable retirement can be difficult. Individual circumstances differ as do financial and lifestyle goals for retirement, and this will dictate how much money you’ll need, to retire comfortably.
According to the Association of Superannuation Funds Australia (ASFA), approximately 7 in 10 people estimate that they require a minimum of $30,000 pa to maintain an adequate lifestyle in retirement.1
Although super is one of the most tax effective ways of saving, unfortunately, compulsory super contributions (those made by your employer) alone may not provide for your lifestyle in retirement.
You can potentially increase your level of super savings by:
- making personal contributions; or
- making contributions to your non-working spouse’s super account.
Personal contributions
You can supplement your super savings by making contributions from your after tax salary. You can make contributions at any time during your working life, and take advantage of the lower tax rates applicable to super.
This is very tax effective as returns on super investments are usually taxed at a lower rate (15%) compared to marginal tax rates on other investment income, which can be as high as 48.5 per cent.
Before you commit to contributing independently to a super fund, you should consider the following:
- the age you’d like to retire;
- the number of years until you retire;
- the lifestyle you’d like to lead in retirement;
- the level of income you’ll need; and
- your current savings.
A financial planner can help you determine if making personal contributions to your super fund is the right retirement savings strategy for you.
Spouse contributions
Another good way to boost your family’s super savings is to make after-tax contributions to your spouse’s super fund. This can help you and your spouse with your joint retirement savings.
You may be eligible to claim an 18% tax offset on the contributions made up to $3,000 if your spouse’s assessable income and reportable fringe benefits is less than $10,800 pa – or is non-working.
The maximum rebate allowed is $540.
As there are tax rules that dictate who can make spouse contributions, it’s worthwhile seeking professional advice before using this super saving strategy.
1ASFA national survey August 2001.
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Further Information |
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