Money Solutions

For many of us, our retirement lifestyle will depend mostly on our savings. Here we look at a number of ways you can try to boost your super savings.

• Make sure you’re not under-contributing
• Co-contributions – how the Government can help you
• Salary sacrificing – tax-effective super contributions
  

Make sure you’re not under-contributing

A lot of people put off making super contributions because they think it’s not the right time. But the first lesson you need to learn is that time in the market is far more important than timing the market. You will accumulate far greater wealth by making small super contributions now, rather than making larger contributions later. For proof, let’s look at the case of two brothers, Barry and Brendon.

Case Study - Start your super saving sooner rather than later

Barry joined an insurance company when he was 35. His older brother Brendon travelled widely before doing an MBA and joining a management consultancy at 50. Barry earns $50k. Brendon earns $100k. But who will have more super when they retire? Let’s find out.

So even though Brendon earns twice as much as Barry, he ends up with roughly $36,000 LESS in retirement savings because he starts saving fifteen years later. The lesson: the more you can contribute to your super fund now, the better off you will be.

Co-contributions – how the Government can help you

Did you know that the Government might contribute to your super? If you’re eligible, this could add $1,500 to your super fund every year.

What is a co-contribution?

A co-contribution is when the Government makes a payment into your super fund based on your income and the amount you contribute to your fund.

How much will the Government co-contribute?

If your income is $30,342 or less, the government will pay $1.50 (up tp a maximum $1,500 a year) into your fund for every $1.00 you contribute to your super in a financial year.

When do the co-contributions cut out?

As your income increases, the co-contributions decrease on a sliding scale. They stop when your income reaches $60,342 a year.

Are you eligible for co-contributions?

There are a number of conditions you need to satisfy to qualify for co-contributions, including:

• you make personal super contributions to a complying superannuation fund
• your total assessable income is less than $60,342
• you lodge an income tax return for the year of income

How much will you receive from co-contributions? Co-Contribution Calculator

(NB If a message 'please wait' appears instead of the calculator, you'll need to install Java Runtime before the calculator will appear on your screen. Simply follow the prompts at the top of your screen or see our FAQs for more details.)

Do you want to learn more about maximising your co-contributions?

Maximising your Government co-contribution could make a big difference to your retirement savings. To learn more, call a Money Coach on 1800 046 144 or email us.

Salary sacrificing — tax-effective super contributions

Salary Sacrificing is a tax-effective way to increase your super savings.

Increasing your super savings

If you’ve made an additional contribution to your super, you will probably have paid it out of your after-tax income. That’s good. But there is a more tax effective way to boost your super savings. It’s called Salary Sacrificing.

Minimising tax with Salary Sacrificing

When you Salary Sacrifice, you reduce your salary in return for an equivalent increase in the amount your employer contributes to your super. You make a bigger contribution to your super and you pay less tax because your taxable income is lower.

How could Salary Sacrificing affect my retirement savings?

To find out how Salary Sacrificing could affect your retirement savings and minimise your tax, use our Salary Sacrifice calculator.

SALARY SACRIFICE CALCULATOR (COMING SOON)

Setting up Salary Sacrificing

Would you like to explore Salary Sacrificing to boost your retirement savings and minimise your tax? We recommend you talk to your employer.

Where do you want to go now?

• I’d like to explore the Superannuation workbook
• I’d like to learn how to make more of my pay
• I’d like to set my financial goals and prioritise my spending
• I’d like to talk to a Money Coach. Call 1800 046 144 or email us