Even a little bit added to your Super can go far in the future with the benefit of compounding interest (returns that you may make on your interest over time). Let’s take a closer look at the benefits of boosting your super and how you can do it.
Why does Super matter?
Aussies are living longer1 and life is getting more expensive over time2. The average life expectancy in Australia is 81 years old for men and 85 for women. So you may need to stretch your retirement savings for 20 years, at least! Also, ladies, you are statistically likely to have a lot less saved in retirement than a man3 due to the gender pay-gap and more time out of the workplace.
How do I take control of Super?
The good news is that you can boost the amount you’ll have saved in retirement by considering extra contributions. Through the potential for investment growth in your Super, along with the benefit of compounding interest, your small contributions could add up to a lot over time and could help you to meet your retirement saving goals.
There are a few ways you can contribute:
| Concessional (before-tax) | Non-concessional (after-tax) |
| Salary sacrifice arrangements made into your super fund via your employer before tax Before-tax contributions are generally taxed at 15% rather than your marginal tax rate There is a limit of $27,500* on concessional contributions. More information. | Personal contributions made from money you’ve already paid tax on (savings or take-home pay, bonuses, inheritance) These contributions can be claimed against your assessable income when you lodge your tax return (meaning your taxable income is reduced and you may receive tax back) The annual limit* is $110,000 but special rules apply if your total super balance is greater than $1.7m or you have bought forward contributions. More information. |
| Government co-contribution (for earners under $56, 112*) | Spousal contributions (if your partner earns less than $40,000 or is not working) |
| If you earn less than $56,112* and make an after-tax contribution to your Super account, then the Government may also make a contribution. The max contribution is $500* | You may be able to claim a tax offset if you make an eligible contribution on behalf of your spouse (married or de facto) who is earning a low income or not working (less than $40,000*). The maximum tax offset is $540* and varies based on your spouse’s income, fringe benefits and employer contribution amounts as well as the amount you contribute. More information. |
Is the 10% contribution from an employer enough?
Even if your employer makes contributions of at least 10% of your pay into your Super, you need to stack-up whether that is enough to fund the kind of lifestyle that you want to live when you retire.
To be ‘comfortable’ in retirement, the Association of Superannuation Funds of Australia (ASFA) estimates that a single person needs $545,000 and couples need $640,0004. The ‘magic number’ is personal and you need to bake in your situation and lifestyle expectations. You can use a retirement calculator like this one to get an idea.
How to get started
If you want to have a super contribution counted in the 2020-21 financial year, make sure Slate receives it by 30 June 2021. The key date for making contributions is not when you make the payment, but when it’s received by the Fund.
1 https://www.abs.gov.au/media-centre/media-releases/life-expectancy-hits-new-high
2 https://www.abc.net.au/news/2022-03-22/getting-left-behind-as-the-cost-of-living-goes-up/100927776
3 https://www.wgea.gov.au/publications/superannuation-gender-pay-gaps-by-age-group
4 https://www.csc.gov.au/Members/News/2022-02-28-How-much-super-is-enough
*For 21/22 financial year
