Make Additional Super Contributions
Making additional contributions to your superannuation can be a smart way to build your retirement savings and secure your financial future. Here are some of the benefits of making additional contributions:
1.Tax benefits: Superannuation contributions are taxed at a lower rate to regular income, which can help you save on tax. Additionally, if you are earning below a certain income threshold, you may be eligible for a government co-contribution which can further boost your savings
2. Compound interest: Superannuation funds typically invest your contributions over a long period of time, allowing you to take advantage of the power of compounding. This means that interest earned on savings is reinvested, generating even more interest over time.
3. Access to a wider range of investment options. Superannuation funds offer a wider range of investment options including shares property bonds and cash by investing your additional contributions in a diversified portfolio you can potentially maximise your returns and reduce your overall investment risk
4. improve retirement outcomes making additional contributions to your soup innovation can help you build a larger retirement nest egg which can provide you with a more comfortable standard of living in your golden years
Super contributions are a great way to boost your super, but are you utilising them in the best way possible? Depending on your financial circumstances, several strategies could set you up for retirement sooner and provide tax benefits now.
Here are three super contribution strategies to consider in 2023!
1. Catch up on concessional super contributions
Before-tax (concessional) contributions can be the most tax-effective kind. Provided your combined income and before-tax contributions are $250,000 or less, these contributions are taxed at 15 per cent which may be significantly lower than your income tax rate.
The current cap on concessional contributions is $27,500 per financial year. However, the Government’s ‘catch-up’ scheme allows you to carry forward unused concessional cap amounts for up to five years, provided you haven’t used up your full cap in previous years.
To be eligible to make catch-up contributions, your total super balance must be below $500,000 on 30th June of the previous financial year.
2. Your spouse may be able to make super contributions
If you are a low-income earner, your spouse or de facto partner may be in a position to make after-tax contributions to your superannuation fund. Depending on both of your financial circumstances, they may also be able to claim a tax offset of up to 18 per cent when they lodge their tax return.
If your assessable income is $37,000 or less, and your partner makes an after-tax contribution of at least $3,000, you‘ll be able to access the maximum tax offset of $540. This offset amount reduces progressively with every dollar you earn over $37,000 up to $40,000.
Even without this tax offset, your retirement savings will still benefit from a boost from spouse contributions.
3. Boost your super by downsizing your home
Are you thinking about downsizing? From 1st January 2023, the minimum eligibility age for downsizer contributions was reduced from 60 to 55 years of age.
Depending on your circumstances, you may be able to contribute up to $300,000 or ($600,000 for couples) from the proceeds of the sale (or part sale) of your home into your superannuation fund.
To be eligible to make a downsizer contribution, as well as satisfying the age requirements, the home must be in Australia and have been owned by you or your spouse for at least 10 years. You also cannot have previously made a downsizer contribution to your super from the sale of another home or from the part sale of your home.
Your super strategy will depend on your financial circumstances
It is important to remember that making super contributions may mean that your money is locked away for quite a few years, so it’s important to be sure you won’t need it in the meantime. Seeking advice from a Financial Planner is the best way to get clarity and confidence when it comes to boosting your super and preparing your finances for retirement.
it’s important to remember that every individual’s financial situation is unique and seeking professional advice is always recommended before making investment decisions
Get in touch with the team at APS Financial Planning to learn more.
Written by APS Senior Financial Advisor, Paul Hatzigeorgiadis.
Paul has over 25 years of experience in the financial services sector. Over Paul’s history, he has provided advice to an extensive range of clients from wealth accumulators to pre and post retirees advising them on Wealth Creation, Cash Flow Management, maximising Centrelink benefits in Retirement, Personal Insurances, Debt minimisation strategies and Superannuation. Paul is married with an 11-year-old daughter and enjoys spending time with family and friends. Whether it’s assisting clients to meet their short-term goals or working with them over a longer term, Paul enjoys helping guide his clients with their financial future.
Get in touch with Paul and the APS Financial Planning team!