Five ways to boost your super

Many Australians, women in particular, enter retirement with relatively small superannuation balances. So when we write about super, and some of the great benefits of having money in super, we often get questions about how to boost your super. Take this comment a few weeks ago from Janice.  

“It’s all very well for you to spruik the benefits of super but how do I boost my super. My husband has passed away and I have been forced to go back to work to boost my retirement savings. My job pays me well so I can save a bit.  I am hoping to retire in 4 years when I turn 67.  I have about $100,000 in super and own my house thanks to my husband’s life insurance.  I’d like to travel and have some fun but I don’t think my super and the Age Pension will be enough. I was told you really need $1m in super to fund a really good retirement.”

Well don’t believe that myth about needing $1m. We also write about that this week. But there are a few ways to boost your super quickly if you are in the right circumstances.  Let’s take a look at five of them. One or more of these could help Janice.

 1: Lump sum after tax contributions

You can make up to $110,000 each year (due to increase to $120,000 from 1 July 2024) in after tax contributions to your super.  This could come from the proceeds of the sale of your home or perhaps from other investments.  You can do this right up to age 75.  

2: Bring forward contributions. 

This allows you to “bring forward” 3 years worth of those after tax contributions outlined in point one and make a single $330,000 dollar contribution. That would make a really big boost to your super.  And from July 1 2024 the annual after tax contribution will increase to $120,000 and the bring forward amount will be $360,000.  There are some tricky rules around this if you inadvertently exceed one year’s limit so it’s worth talking to an adviser to get some guidance here.  

Now they are some pretty big numbers and most people don’t have the capacity to boost their super by those amounts which brings us to …

3: The downsizer contribution

For many Australians their home is their most valuable asset.  And many look to sell their home when they finish work, separate, or the kids leave home.  If you do choose to sell your home you could take advantage of what is known as the downsizer contribution.  This is where you can take up to $300,000 of the proceeds from the sale of your home (some conditions apply) and put this into super.  This is available to people over age 55 and the even better news is there is no upper age limit.  

Selling your home might also give you enough money to use the bring forward provisions as well as the downsizer.  In theory someone could make a downsizer contribution of $300,000 and an after tax contribution of $330,000 totalling $630,000.  That’s a lot of money but some people downsizing from valuable homes might be in a position to do that. They will need to stay under the total super balance limit of $1.9m.  And Janice is well below that.  

So what are the other two main ways to boost your super.  

4: Salary sacrifice contributions. 

Janice is still working. Her employer will be making contributions to Janice’s super account.  Janice can top these up with salary sacrifice contributions if she stays under the $27,500 p/a pre tax contribution limit.   These limits are increasing to $30,000 p/a from 1 July 2024

5: Carry forward contributions

This is another catch up contribution that helps enable people to boost their super and potentially reduce tax.  Often people late in their career who have paid off their mortgage, or are seeking to offset a capital gains tax bill, find themselves in a position to take advantage of this. This provision enables someone to carry forward previous years unused pre tax contributions – up to five years worth – and use them in later years. So for instance if Janice’s super contributions from her employer last year were $10,000 she would have $17,500 she could carry forward to this year giving her $27,500 + $17,500 = $45,000 this year.   And she could take advantage of up to five years worth of these unutilised limits.  You can check where you stand against these limits on your MyGov account or else with your super fund.

Now many of these numbers look very big to most people but they do highlight that it is possible in certain circumstances to make a really significant boost to your super in later life. You could have sold your home, or have more ready cash when kids leave home or you pay off the mortgage.   

There are lots of things to consider 

  • Lump sum contributions limits
  • Bring forward contributions
  • Downsizer contributions
  • Salary sacrifice contributions
  • Carry forward contributions
  • Total super balance limits
  • Government co-contributions  -we didn’t cover this today but it help low income earners

We can’t address everything here but will write more in the future.  In the meantime our advisers can talk to you about what your retirement forecast could look like and the options available to you to boost or at least get your super working for you.  

So could you take advantage of any of these five ways to boost your super?  

This article is provided by Retirement Essentials Representative Number: 001260855. We are an authorised representative of SuperEd Pty Ltd ABN 88 118 480 907 AFSL #468859. This information is not intended as financial product advice, legal advice or taxation advice. It does not take into account your personal situation, goals or needs and you should assess your own financial situation, consider if the information is suitable for you and ensure you read the relevant Product Disclosure Statement (PDS) if you choose to make any changes to your financial situation. It is always advisable to consult a financial adviser before making financial decisions.