How to supercharge your super

Aware Super

No matter your age or job, there are plenty of simple ways to make sure you’re maximising your retirement savings. Here, the Aware Super team sets out their top tips.

Relax. This isn’t one of those articles.

You know the type – the ones urging you to give up ‘just one takeaway coffee every day’ and invest that $4.50 instead to reap the rewards of compounding returns later.

If you’re anything like us, you need to get that coffee to a) function, so you can keep your job, and, b) catch your breath, so you can keep your sanity.  

No, don’t give it up. Think of it as an investment in your future. But if you want to enjoy your coffee and enjoy a comfortable retirement thanks to the power of compounding returns, read on.

There are many ways to supercharge your super – some suitable for anyone of any means, others for people at certain stages of life. Here are some of our top tips.

Consolidate your super

Combining your super in one account not only makes it easier to track and control – it also ensures you won’t be paying multiple sets of fees.

If you have a myGov account, you can consolidate your super online through the ATO (at the same time, check you don’t have any lost super). Alternatively, contact your preferred fund and they’ll help you through the process. Before you do, however…

Make sure you’ve chosen a top fund

Strong long-term returns and competitive fees are crucial to maximising your super.

While the benefits might seem small from one year to the next, over time it can have a significant impact on your balance. The ATO’s YourSuper comparison tool allows you to quickly compare long-term returns and fees across MySuper products – the low-cost default accounts used by most Australians.

Check you’re getting what you’re owed

Employers are required to pay super at a rate of at least 10.5% (rising to 11% in July) of ordinary time earnings, with very few exceptions.

Log in to your super account through your fund’s website or app to see your payments, then reconcile them with your payslips to ensure you’re getting the correct sum. If not, query it with your employer, or you can report it to the ATO online.

Note that some employers pay super every payday but the law allows for it to be paid as infrequently as every quarter, however watch this space, the government has announced the law will soon change.

Top it up!

Okay, so we don’t suggest forgoing that coffee, but if you are in a position to put extra into your super, it can go a long way. Aware Super’s analysis indicates every dollar invested early in your working life can be worth three dollars at retirement.

Then there are the tax benefits (a timely thing to consider with June 30 approaching). When your employer pays your compulsory super, it’s taxed at only 15% – significantly less than the marginal tax rates most workers pay on their income, which is why these are known as ‘concessional contributions’.

Up to a limit, most people can chip in extra, and it’s still taxed at this concessional rate. Investment earnings on your super are also generally taxed at only 15% rather than your marginal rate.

Many people therefore like to make further contributions (other than concessional contributions), which the Government allows – again, up to a limit. Contact your super fund for details on payment methods and limits.

Get a top up from the other half…

If your income is $37,000 or less, your spouse can claim an 18% tax offset on any post-tax contributions to your super up to $3,000 per financial year – a maximum offset of $540. The offset reduces for every dollar of income over $37,000, phasing out to zero at $40,000.

You can also receive super from your spouse through contribution splitting – that is, your spouse can direct up to 85% of his or her concessional contributions from the previous financial year into your super.

…or from the Government

If you’re a lower income earner, for every dollar you put into super as a personal contribution from your take-home pay, the Government will chip in up to 50c – up to $500 per year.

To get the full $500, your annual income will generally need to be $42,016 or less, and you’ll need to contribute at least $1,000. The less you contribute or the higher your wage, the lower your Government co-contribution will be, cutting out entirely above incomes of $57,016.

Get help

There are limits and eligibility rules you need to take into account for all the super-boosting strategies discussed above, and you need to consider the best course of action for your circumstances.

That’s where guidance and advice can help. Super funds often provide general and simple advice for members at no extra cost, and comprehensive advice for a fee. Your fund may also host seminars and webinars with lots of tips and tricks, and offer digital calculators and advice tools online.

Supplied by Aware Super Pty Ltd, Trustee of Aware Super. This is general information only. Before taking any action, please consider your own circumstances and consider getting advice to make sure it is appropriate for you. Please also look at the relevant Product Disclosure Statement.