24 Apr Strategies to Optimise Your Superannuation and Retirement Savings
We all hope to boost our retirement savings with our superannuation, but for some Aussies, this can seem like a pipe dream that has become out of reach. Specifically, people who work part-time, casual or who take extensive breaks from the workforce, often find it difficult to make sufficient contributions to their super accounts to give them a comfortable retirement.
Later when they retire, they are faced with a life on the pension with little help from their super. Over the past few years, however, there have been significant changes to the way you can top up your super and to the way it is taxed. If you understand these changes, you can use them as strategies to optimise your retirement savings and create a much brighter lifestyle than you had anticipated.
If the above scenario sounds familiar to you, here are three strategies that should help you to optimise your superannuation to the best of your ability.
1. Spousal superannuation contributions
If your husband, wife, de facto or same-sex partner is a stay-at-home parent, then their super contributions will have stopped when they left their job. This is one of those situations that often leaves partners in financial trouble when they retire, but now the employed partner can contribute to their spouse’s super.
There are some restrictions, but in general, if your partner earns $37,000 or less per year, and you contribute a minimum $3000 each year to their super savings, you not only top up their super, but you also qualify for the maximum tax concession of $540. If they earn above $37,000 but less than $40,000, you will receive a partial tax concession, but not if they earn above $40,000; you can still make contributions to their superannuation, however.
Unfortunately, you can’t contribute more than $100,000 per year to their super, but nevertheless, this is one of those strategies that can make a huge difference to your spouse’s super.
2. Carry-forward contributions
This strategy allows you to boost your own super to top up your retirement savings. For the years 2018 to 2019, everyone can contribute an additional $25,000 to their super account (known as the concessional contribution cap), but if you don’t contribute this total amount every year, you can carry it forward for five years.
This means that if you suddenly receive an inheritance or win a moderate amount of money, you can top up your super! As an example, if you don’t top up your super for four years, but suddenly receive $100,000 inheritance, you can pay this into your superannuation account and still stay within the five-year rolling cap. This is also a great option for anyone who is returning to full-time employment, as they can top up their super and increase their retirement savings.
3. Downsizing can top up your superannuation
If you are over 65 and decide to sell your home to downsize and release the equity, you now have the option of topping up your superannuation with up to an additional $300,000. This can make a big difference to your lifestyle, creating a significant and unexpected additional income or investment in your future.
Since this is not a non-concessional contribution, it won’t count towards your contributions caps and isn’t affected by the $1.6 million cap on your super. Also, this is a contribution of $300,000 to each of your respective super accounts, making it one of the best strategies for maximising your super later in life.
If you want help optimising your super and retirement savings, call us on 07 3871 1522 or send us an email to make an appointment with one of our Conrad Carlile super specialists.