For many working Australians, superannuation can be an effective way to secure their financial future in retirement.
It’s important to regularly review your superannuation fund and level of contributions to ensure your fund is on track to help you reach your retirement goals. The more extensive your goals, the more super you’re likely to need to provide sufficient retirement income, so it’s important to know what opportunities you should be taking advantage of.
Maximising your super
The government provides generous tax incentives to encourage Australians to invest in super with contributions being taxed at 15% rather than the personal income tax rate of up to 49%, including the Medicare and the temporary Budget Repair levies. You might consider setting up a salary sacrifice arrangement with your employer, allowing you not only to make super contributions from your pre-tax salary but also potentially reducing your income tax bill.
You may be eligible for other benefits, such as the government co-contribution when you make after tax contributions to your own super or a tax rebate when making contributions to your spouse’s super. You may even be able to save tax by paying for your life insurance through your super.
Some people find it difficult to know how much to contribute to super apart from the current employer sponsored superannuation level of 9.5% (this is set to gradually increase to 12% 2025). There is no right or wrong amount but there are contribution caps (set out by legislation) which limit how much you can contribute each year without additional tax applying.
If you own a small or medium-sized business, we can advise you on how to structure a corporate super plan that takes into account any salary packaging requirements and remuneration programs.
It is never too late to take control of your super, but the rules are complex.It is important to get professional financial advice to ensure you make the most of your superannuation savings.