If you’re planning to retire in the near future, you may be searching for ways to top up your nest egg – whether that’s through personal savings or your superannuation.
Every hardworking Australian deserves to enjoy their retirement the way they want. But that also requires having sufficient money to fund your perfect retirement.
Turning the other cheek to your super, knowing it may not be enough will only lead to disappointment later in life, especially for Baby Boomers who didn’t get superannuation guarantee contributions until later in their working life.
Unfortunately, the Age Pension may be enough to fill in the gaps when your super falls short, but keep in mind that you may also not be eligible for it.
Instead of settling with less than you deserve in your later years, it’s better to act now and boost your super and retirement fund leading to your retirement. By doing this, you can guarantee a more comfortable future for you and your family.
How to Supercharge Your Super as You Near Retirement
Tip #1: Utilise After-Tax Contributions
Taxes can be draining in more ways than one, but there are plenty of tax-deductible contributions you can make to regain your finances. After-tax or ‘non-concessional’ contributions are extra contributions you are entitled to make from money you’ve already paid tax on. For example, it could be money from your:
- after-tax salary,
- an inheritance,
- Or a tax refund.
It’s important to be aware that non-concessional contributions are capped at $110,000 each financial year. But making personal contributions to your super is an excellent way to maximise your money.
Tip #2: Try Tax-Effective Contributions: Pre-tax Super Contributions
If you don’t have extra income to make after-tax contributions, why not use a portion of your before-tax income to increase your super?
Some of the most common ways to make this tax-effective contribution are salary sacrificing, which is an agreement between you and your employer stating that you’ll lower your take-home pay to add more into your super.
The payments are recognised as concessional contributions, which are taxed at 15%. It’s important to note, that this tax rate will usually be lower than your marginal tax rate. Therefore, concessional contributions are financially beneficial as they allow you to pay less tax while boosting your retirement savings.
Tip #3: Consider Different Investment Options
Investments can be one of the best ways to achieve financial wellness. The returns can significantly build the foundation for your wealth, so it’s crucial to look into the investment options that can reward you based on your age, goals, and risk tolerance.
With that in mind, it may be worthwhile to speak with a financial planner on the best course of action for your retirement investments.
Tip #4: Don’t Forget the Catch-Up Concessional Contributions Rule
If you have any unused concessional contribution caps from 1 July 2018 moving forward, then you can carry forward your unused concessional caps to make up for the years you haven’t been contributing extra to your super.
Of course, you still have to be careful that you won’t exceed your contributions cap by doing this, or you may end up having to pay for penalties.
Breaking Down Different Tactics to Boost Your Super
Your super will set the stage for your retirement years, so it’s worth ensuring that you have more than enough to lead a comfortable life as you grow older.
If you feel like you haven’t had enough time to grow your super, the simple tips above may be able to help you explore different options to make up for financial shortcomings.
Do You Need Help with Financial Planning for Retirement?
Knowing that accessing your super during retirement isn’t enough to guarantee your financial security, it’s best to consult with financial advisors from EJM Financial Services to help take the guesswork out of your retirement plans.
After all, managing your finances can be difficult for anyone for a number of reasons, but it can be trickier to set aside enough savings for retirement.
We offer superannuation and investment advice in Melbourne, so you can supercharge your superannuation and achieve financial independence throughout your later years.
Book an introductory call with us today and see what we can do to ensure you can enjoy your golden years.