A super start to 2023
If the holidays had you dreaming about retirement, now may be the right time to step up your rate of saving. After all, the sooner you start putting your hard-earned cash to work, the quicker you’ll achieve your retirement goals.
There are several strategies you can use now to help boost your nest egg and potentially save on tax at the same time.
1. Salary sacrifice
If you want to grow your retirement savings while reaping tax benefits, salary sacrifice may be worth investigating. The arrangement involves some of your pre-tax salary going into super, which in turn reduces your taxable income. While the super contributions are taxed at 15 percent, for many people that’s lower than their marginal tax rate.
2. Super splitting
Members who would like to make sure they retire with a similar super balance as their spouse – even if you both have different incomes – may want to consider super splitting. Essentially, fund members choose to ‘split’ part of their contributions already in super into their partner’s super account.
Eligibility conditions apply. Applications forms for contribution splitting can be found here.
3. Spouse contributions
If your spouse earns a low income – or has no income – you may also be able to claim a tax offset of up to $540 by putting after-tax money into their super account. For more information on how spouse contributions work or whether it’s right for you and your partner, please speak to an Active Super financial planner.
4. After-tax contributions
If you have a lump sum that you’d like to put into super, you may look at after-tax contributions. It is not uncommon for individuals who are closer to retirement to use after-tax or non-concessional contributions to build up their nest egg.
Generally, savers can put up to $110,000 a year from their after-tax money into super before they have to pay any additional tax with the benefit that balances can grow quite quickly with non-concessional contributions.
It is also possible to ‘bring forward’ up to three years’ worth of super contributions, but that depends on age and super balance sizes. Remember, Super Booster payment rewards are considered a non-concessional contribution.
If you require further advice on your retirement needs, then contact one of Active Super’s financial planners. Feel free to contact us on 1300 547 873 or make an appointment to see how we can help.*
*Please note, should you choose to meet with one of our planners and decide to not obtain personal advice, no fee will be payable. However, fees may apply should you choose to proceed to personal advice. Your financial planner will discuss any fee payable when meeting with you and, if a fee is applicable, will advise you of the fee should you decide to proceed with obtaining the advice.
Any advice in this article is general in nature and has been issued by LGSS Pty Limited (ABN 68 078 003 497) (AFSL 383558), as Trustee for Local Government Super (ABN 28 901 371 321) (‘Active Super’). This article does not take into account your personal objectives, financial situation or needs. Before acting on it, you should consider the appropriateness of it having regard to these matters. If you would like advice that takes into account your personal circumstances, please contact a financial adviser.