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For many Australians, one of the first things that comes to mind about retirement is how it’s going to be funded. Australia’s superannuation system is generally seen as quite robust and sufficient for the needs of many retirees - but not always. Poor planning and management of a super fund can make retirement much more challenging, but the good news is that there are many methods to optimise your super so that you can make the best plans for your retirement. Here are five quick tips on how to optimise superannuation contributions: 01.Consider Salary Sacrificing One of the fastest ways to ramp up your retirement nest egg through your super fund is to forego some of your earnings in exchange for additional benefits. Salary sacrificing is often overlooked because many of us prefer a bird in hand rather than two in the bush, as the old saying goes. Implementing salary sacrificing can benefit you in more ways than just bumping up your super fund - especially in the long term. Firstly, sacrificing your salary can knock you down to a lower marginal tax rate, or “bracket.” There is a 15% tax on concessional contributions, but the total tax is often significantly lower than what you would have been taxed at a higher marginal rate. Keep in mind that if your total income and concessional contributions exceed $250,000, you may be subject to additional taxes. 02. Consolidate Super Accounts Quite often, and especially over the drawn-out course of our working years, many of us may have multiple super accounts from various employers. Changing jobs is much more common nowadays than it was in the past, and we may overlook the fact that multiple super funds may be active in our names. Having multiple accounts could make it cumbersome to calculate and maximise your returns, subject you to additional fees and perhaps higher taxes. Consolidation can be done online through the Australian Taxation Office (ATO) or with the assistance of a professional wealth management firm. 03. Check Your Super Fund Regularly As with many investments, we often go through a phase of excitement in the beginning, constantly checking the listed price of a stock or ETF. It eventually wears off, and perhaps we don’t check it as often over the long term. A pleasant weekend might not feel like the best time to check the status of your super, but at some point, it’s a good habit to get into. A good annual review can keep you up to date with your fund’s progress, fees and taxes, and give you precious insight into steps you might want to take to meet certain goals. 04. Take Full Advantage of Government Tax Benefits and Offsets Here’s where things can get a little tricky, but knowing how to maximise tax benefits and offsets can make a significant difference in your retirement plans. There are many tax benefits and offsets that may apply to you, depending on a wide range of circumstances. The key is understanding concessional and non-concessional contributions, as well as what you may be eligible for. Moreover, there is an element of strategy, since structuring contributions in some ways may be more beneficial with regard to income taxes, for example. A qualified wealth management professional can optimise your super in the most efficient way for your goals. 05. Make Sure All Employer Contributions are Updated Perhaps you’ve been in the labour force for decades and can barely remember that job you held in your early 20s. Every little bit counts, and that’s why it’s important to make sure that employer contributions are up to date and accounted for. Fortunately, there are ways to look for lost super, re-evaluate your balance and contribution caps, but having all super funds accounted for is essential for optimising your retirement nest egg. Davlin Wealth Management For superannuation and financial planning advice, contact our trusted Sydney financial advisors at Davlin Wealth Management. Schedule a free 15 minute phone call to find out how we can help and to get clarity on your options. Fill out a contact form on our website or call us on (02) 8445 9999. Comments are closed.
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