You’re required by law to make contributions to super to give you enough funds in your retirement years, which means making the most out of these contributions is really going to help you stay financially secure for longer:
Understand Contribution Types
Know the difference between the kinds of contributions you make to your super fund:
- Concessional Contributions: Firstly, these are contributions that are made before tax – they’re made up of contributions that your employer will need to make and any savings from your salary sacrifice arrangement.
For the current financial year, they’re capped at $27,500 and taxed at 15% – fortunately, more often than not, that’ll be lower than your marginal tax rate.
- Non-Concessional Contributions: On the other hand, these kinds of contributions are made after tax, and they’re capped at $110,000 per year.
Take Advantage of Salary Sacrifice
This is where you make an arrangement with your employer so that they’re paying at least part of your salary (before tax, of course) into your super fund – this is one of the better ways you’re able to boost your super balance since you’re simultaneously reducing your taxable income.
Obviously, just make sure you’ve still got enough of your wage to actually live comfortably off and also don’t exceed the cap we mentioned in the previous section (you’ll receive tax penalties for that).
Utilise Government Co-Contributions
Anyone who makes less than $58,445 per year annually and makes after-tax contributions to their super might actually be eligible for a government co-contribution of up to $500 – obviously, that’s not going to be the difference between you living in paradise or poverty during your retirement, but it’ll definitely help you build your retirement savings if you’re a low to middle-income earner.
Consider the Downsizer Contribution
People who are older than 55 sell their homes are able to contribute a max of $300,000 of the proceeds into their super – they call this a ‘downsizer contribution’ and the best part about it is it doesn’t count towards your non-concessional contributions cap at all. It provides an excellent opportunity to significantly boost your super balance.
Plan Ahead With AdvisoryOne
Planning for your retirement later on in life doesn’t need to be complicated when you’ve got a team of chartered accountants and certified bookkeepers at hand, so partner with AdvisoryOne today by calling 02 6324 5888 to learn more about how we can help you.
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