finder.com.au
NEW! Download App

Preparing Your Superannuation for Retirement: Tips and Strategies

Why Planning Your Superannuation is Important

Avatar
William Eve
Updated
Fact checked

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

With superannuation as the major way of saving for your retirement and market volatility a constant fact nowadays, it seems difficult to reconcile the two. However, if you are thinking of boosting your super to have your dream future, you can never disregard the fact that certain risks need to be taken. But the question is, how much risk should you take? The answer lies in how much return you want – if you want a higher return, then you need to risk more. And by determining how much return you want will answer the underlying question of how much superannuation is enough.

Make an enquiry for life insurance funded through superannuation

Boosting Your Super

Looking at the figures above would have given you an idea by now about how much you need. The next step then is how to make your super work to its full potential so that you can reap its benefits later when you retire. Some people might have been aware how to do that, but if you are still finding your way to it, there are several ways how to boost your super.

  • Salary sacrifice – This is an agreement between you and your employer where you contribute a part of your pre-tax salary to your super instead of taking it as cash. This method will not just boost your super, but it will also entitle you to some tax benefits.
  • Combining your accounts – Locating all your lost super and combining them into one single account will save you not only money, but time as well. It can save you time because it will be easier to keep track of everything. It can save you money because you will just have to pay a single management fee.
  • Spouse contributions – When you make a voluntary contribution into your spouse’s account, you boost her super and you might become eligible on some tax benefits if your spouse is earning less than $13,800 and meets the necessary requirements.
  • Making some investments – Letting your super work through some carefully and strategically chosen investments could make a huge difference to the amount you will get when you retire. It can also save you a lot of money since the Government has made some tax concessions to superannuation savings.
  • Self-employed contributions – If you are self-employed, you can save a lot of money since contributions to your super are fully tax deductible. This can make a huge impact on your taxable income.

Now about setting up self managed super funds

1. Track down all your superannuation. If you had several employers and performed various jobs, chances are you have super accounts available and might have lost track some of those. It is important that you claim those lost super and consolidate them into one account. After you have made this effort, you can prepare your super as a source of pension fund when you retire.

2. Determine the amount you need when you retire. The amount of super fund that you need to set up for your retirement is a personal choice and the kind of life that you want to live when you retire. Once you stop working, you will rely on your super, other investments and if you qualify, aid from the government. Consider how much money you need in the future, the plan that you need to undertake to achieve it and your current savings. With the aid of superannuation and retirement calculators, you will determine amounts and your possible investment schemes. It is important that you start early with your money placement so that you will have the best opportunity to adjust your savings.

3. Grow your super for retirement. Growing your super is a step that you can take in order to prepare as you leave your day job. If you are going to rely on the SG contributions from your employer, you can determine your future benefits using superannuation calculator. If the resulting amount is not sufficient for the comfortable life that you want when you retire, then look for ways to increase your super.

4. Consider the ways to increase your super. You can gradually increase your superannuation and do voluntary contribution to increase the amount of your super fund. You may also choose to sacrifice salary and ask your employer to deduct a portion of your income and put it in your super fund. In this way, you increase your investment and will have the opportunity to increase your take home pay since your taxable income decreased. If you qualify, you may seek for government co-contribution scheme to grow your super. Growing your superannuation means growing your pension that you can use when you retire.

5. Know more about Transition to Retirement option. The Transition to Retirement is a strategy available to individuals who are over 55 years old. This strategy involves taking some or the entire super and converting it into a pension even if you are still working. There are advantages when you employ this strategy. You can reduce the hours you work without necessarily decreasing your income. Another advantage is that you can transfer some or the entire amount of your super to pension. The real benefit of investing to super and moving it to pension environment is that the investment earnings you receive will be tax-free. The return of your money will be higher than retaining your account in the superannuation.

6. Salary Sacrificing. Salary sacrificing is another step that you can do in order to supplement your superannuation. Aside from the mandatory superannuation guarantee contributions made by your employer, you can ask your employer to reduce your salary and put it into your super fund account. This step has tax advantages. Salary sacrificing means you can get tax advantages of Transition to Retirement without exhausting your superannuation instantly.

7. Giving voluntary contributions. The government encourages everyone who is in the workforce to invest in superannuation. This is the reason why super fund is very tax friendly. One way to prepare setting up an amount that you can use when you finally leave work and retire is to do voluntary contributions to your super. This way, you will grow your superannuation which you can use as you retire. Any savings that you have can be pooled together into your super including your sale of asset and inheritance received.

8. Combining super strategies. One way to prepare for the future when you finally retire is to combine different strategies to maximise your benefits. If you are over 55 years old, it can be very effective if you combine the Transition to Retirement strategy with con-contributions and salary sacrificing. You need to understand your options very carefully and consider your present financial priorities. Seek financial advice so that you will be properly guided in making important financial decisions.

Your Super and Life Insurance

With all the tax concessions the Australian Government has implemented on superannuation, another area where you can boost not only your super, but your savings as well is by purchasing life insurance through superannuation.

By getting life insurance through your super lets you pay your premiums with pre-tax money as opposed to a standalone policy which makes you pay the premiums from after tax income.

Moreover, using your super fund to pay for your life insurance premiums would let you top up other standalone insurance policies; thus, increasing your cover. It also entitles your beneficiaries to receive tax-free lump sum payments.

However, it should be noted that using your super fund to pay for your insurance premiums can greatly offset the amount of your retirement savings. In order to prevent this from happening, making additional contributions to your super is highly advised.

Enter your details and one of our partner brokers will call you. They will discuss your quote, options and available products.

Sex
Do you smoke?

An adviser can help you find cover from trusted life insurance brands.

  • Get competitive quotes from multiple brands
  • Lower rate of declined claims (according to ASIC)
  • Save time and effort
Lender Logos

More guides on Finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site