5 ways to kickstart 2021-22
The start of a new financial year is always a great time to establish money habits that will see you through the next 12 months.
While the end of a fiscal year sometimes feels like a frenzy, July is an opportunity to hit reset. For some Active Super members, that may mean setting goals for the year ahead. For others, it could mean adjusting behaviours to achieve more financial flexibility.
Here are five actions you can take right now to set yourself up for 2021-22 and beyond.
1. Review retirement goals
Throughout our working lives and early retirement, our plans tend to change. Some of us work longer, while others realise we need more cash than we thought to maintain the lifestyle we want. That’s why it’s important to periodically review your goal and what you need to do to achieve it.
The Association of Superannuation Funds of Australia currently estimates couples need $640,000 for a comfortable retirement, while singles need $545,000. However, some people may wish to save more or less, depending on the standard of living they want to maintain. Once you have a set figure, you can come up with a schedule over several years to hit your target.
2. Salary sacrificing
Salary sacrifice contributions are regarded as concessional (before tax) contributions. Concessional contributions include assessable contributions made by your employer and any other contributions on which you may claim a tax deduction.
Salary sacrifice can be used as a strategy to top up super while potentially saving on income tax at the same time. If you earn more than $18,200 a year, you may reap a tax benefit from the favourable tax treatment of super (15 percent) when compared to your marginal rate.
If you’re already salary sacrificing, July 1 is a good time to look at the arrangement and whether or not you’re happy with how much you’re putting into super. If you’re not salary sacrificing, the new year could be a chance to learn more about it.
3. Plan voluntary super contributions
Making extra contributions to super is a great way to build your balance, but it does require a bit of planning due to concessional (before tax) limits. In great news for Active Super members, from 1 July 2021, the cap on such contributions was raised to $27,500 a year from $25,000. So, if you hit your cap last year this means an extra $2500 in concessional contributions that you can contribute this year. Age is a consideration when it comes to eligibility to contribute.
4. Create a money calendar
Just like a calendar for work and social events, a new financial year schedule of incoming and outgoing money can help with both planning and saving. It removes the surprise element when a big bill or direct debit occurs and can allow you to track the months when you have extra dollars to put away.
5. Check your insurance
If you’ve recently had changes to your family, health or financial circumstances, your insurance may no longer be fit for purpose. It’s worth checking in to ensure that you’ve got the right level of coverage for your changing needs.
We’re here to help you with your super strategies. Contact us to find out more about setting up salary sacrifice or making extra contributions.