Boosting your super after 60

Smart strategies for super growth

Retirement may feel close, but growing your super after 60 can still provide significant financial benefits. Whether you’re working, selling assets, or receiving an inheritance, there are many different strategies to make the most of your superannuation.

Here’s what you need to know:

Contribution limits and Total Super Balance (TSB)

Super contributions are subject to annual caps. Exceeding these caps can result in additional taxes, so it’s important to stay within the limits:

• Concessional contributions (before-tax): $30,000 annual limit for financial year 2024-25.
• Non-Concessional contributions (after-tax): $120,000 annual limit for financial year 2024-25, or up to $360,000 using the Bring-Forward rule.

Your Total Super Balance (TSB), measured on 30 June of the previous financial year, determines your eligibility for:

• Non-concessional contributions and the Bring-Forward rule
• Carry-forward provisions for unused concessional caps over five years
• Government co-contributions and spouse contributions

You can check your TSB on the ATO’s myGov website, but it’s important to ensure the figures are up to date with your most recent contributions.

You can also check how much extra you can contribute using the Carry-Forward provision on myGov by checking under ‘superannuation’ – you will see the amount of ‘unused pre-tax contributions’ you have available to use. To be eligible to make carry-forward contributions, your TSB at the end of the previous financial year must be less than $500,000.

Age limits and the work test

If you’re under 75, your super fund can accept most contributions, but if you’re 67 to 74, you’ll need to meet the work test or work test exemption to claim a tax deduction on personal contributions.

Once you turn 75, your super fund can accept employer and Downsizer contributions at any time. Any voluntary contributions must be made within 28 days after the end of the month of your 75th birthday.

Understanding the work test 

If you’re 67 or older, meeting the work test is key to claiming a tax deduction on personal contributions you make to super. 

• Work Test: 40 hours of gainful employment within a consecutive 30-day period during the financial year.

• Work Test exemption: Allows contributions for one more year if you met the work test in the previous income year, your TSB is under $300,000, and you haven’t used the exemption before.

Here are some examples:

Meeting the Work Test

Janet is a consultant

Janet, 68, retired from her full-time job but started consulting part-time, working 10 hours per week. In July, she completed 40 hours within a consecutive 30-day period, meeting the work test. This allows her to make personal contributions to her super and claim a tax deduction up to her concessional cap this financial year, as well as next financial year even if she ceases to work.

Failing the Work Test

John earns passive income

John, 72, retired two ago and earns passive income from property rentals. He no longer engages in gainful employment. Since he didn’t work 40 hours in any 30-day period this financial year or last financial year,  he does not meet either the work test or the work test exemption, and cannot claim a tax deduction for personal contributions. John may still make non-concessional contributions if eligible.

Using the Work Test Exemption

Margaret is exempt

Margaret, 69, retired in June last year after working full-time. She met the work test in her final financial year and has a super balance of $250,000 as of 30 June. Since she hasn’t used the work test exemption before, she can make voluntary contributions in the current financial year despite not working.

Failing the Work Test Exemption

Peter’s balance is too high

Peter, 70, retired two years ago and has a total super balance of $320,000. Even though he met the work test in his final year of employment, his balance exceeds $300,000, so he doesn’t qualify for the work test exemption and cannot make further contributions this year.

Smart strategies to maximise contributions

Claim tax perks

Did you know you can claim a tax deduction for after-tax contributions to super?

This strategy can be particularly powerful when selling significant assets, such as an investment property or portfolio, where capital gains tax may apply. It allows you to reduce your taxable income while boosting your super balance.

The ‘claiming a tax deduction on personal contributions strategy’ can work in any tax year when you have taxable income, so it isn’t limited to just the sale of an investment asset with gains.  It could be used if structured correctly when receiving an inheritance or downsizing your home.

Here’s an example: When downsizing, even though the sale of your home is typically exempt from capital gains tax due to the main residence CGT exemption, if you’re still working and earning taxable income, you can allocate some of the net proceeds to claim a tax deduction for your after-tax contributions to superannuation. In this way the proceeds from selling your home can be structured to take advantage of the following depending on your eligibility:

• A tax deduction for your contribution, within the relevant concessional contribution cap ($30,000 in 2024-25 year)
• The Downsizer Contribution lifetime limit (up to $300,000 per person), which doesn’t affect your usual caps.
• The annual Non-concessional Contribution caps of $120,000 or Bring Forward provisions of up to $360,000 if eligible.

Small Contributions, Big Impact: 

Salary Sacrifice Contributions

Making small, regular contributions to your super can have a significant affect on your retirement savings over time. One effective way to do this is through salary sacrifice.

Salary sacrifice allows you to contribute part of your pre-tax income directly into your super, which reduces your taxable income and may lower the amount of tax you pay. For example, if you’re working part-time or full-time, setting aside even a small amount of your salary for superannuation can add up quickly over time, boosting your super balance.

The key benefit of salary sacrifice for most people is that these contributions are taxed at the concessional rate of 15% (instead of your marginal tax rate). In general, if you are earning more than $45,000 a year, this can be tax effective. For higher income-earners, if your income plus before tax contributions are more than $250,000 pa, you pay 30% tax on your salary sacrifice contributions.

Whether you’re still working full-time or part-time, salary sacrifice can be a tax-efficient strategy to boost your super balance compared to paying your marginal tax rate on the amount  you can afford to put towards your future.

Boost your super with government co-contributions

If you’re a low or middle-income earner and make an after-tax contribution to your super, the government may match it, up to $500, giving your retirement savings an extra boost.

Younger spouse strategies

If your partner is not yet of Age Pension age their super will be exempt from the assets test.

Younger spouse contribution strategy

Transferring assets to a younger spouse’s super is a popular consultation during which Retirement Essentials advisers assist members. Such consultations often result in   increased eligibility for a part Age Pension in addition to a  Pension Concession Card (PCC)

Contribution splitting to maximise Age Pension

If your spouse is younger and below Age Pension age, contribution splitting can also boost your Centrelink entitlements. Up to 85% of one year’s concessional contributions can be transferred to their account, provided they meet eligibility requirements.

This strategy doesn’t reduce the original contributor’s concessional cap but can improve your overall financial position. 

What could work for you?

From downsizing to consistent small contributions, there’s no one-size-fits-all approach to growing your super. Your strategy will depend upon your circumstances, goals, and total super balance.

Not sure where to start? A Retirement Strategy consultation can help uncover opportunities you may not have realized were possible, giving you the confidence to make informed decisions about your super. Another popular consultation – Understanding more about super has helped many member understand their full range of options when using super savings.

Are you planning on giving your super a boost this year?