On this page
- 1. Save on your tax bill
- 2. Review your insurance cover
- 3. Check your benefit nomination
- 4. Boost your other half’s super account
- 5. Review your investment option
- 6. Set a super savings goal
- 7. Consider personal tax-deductible or carry-forward super contributions
- 8. Take advantage of free government money
- 9. Consider starting a self-managed super fund (SMSF)
- 10. Check your employer’s SG contributions
Super isn’t a set-and-forget investment, and it’s important in these crucial decades of your life that you keep an eye on your super account.
Your 30s and 40s can bring big life decisions – like starting a family or buying a home – so it’s important to ensure your super choices remain the right ones for your personal circumstances.
Not every tip in our list will be suitable for everyone in this age group, but they will help you start thinking about some of the super-related issues you should consider during this important life stage.
1. Save on your tax bill
If your salary is slowly increasing, these decades can be a good time to consider setting up a salary sacrifice arrangement with your employer.
If you can make extra contributions from your pre-tax salary into your super account, you not only increase you super balance, you could also reduce your annual tax bill, as concessional (before-tax) contributions are taxed at the lower rate of 15%.
2. Review your insurance cover
Now is definitely the time to check the insurance cover that comes with your super to ensure it’s appropriate for your personal financial situation. If you have a big mortgage or a growing family, it’s important to check you have sufficient insurance cover to look after the people that depend on you if you die or cannot work for a long period.
By paying the premiums for death, total and permanent disability (TPD) and income protection cover from the money in your super account, it can be a cost-effective way to get insurance protection if your family budget is stretched.
3. Check your benefit nomination
Most super funds encourage you to make a death benefit nomination that guides your super fund’s trustee on how you would like your death benefit to be distributed if you die.
Most super funds allow you to make a binding nomination, but these need to be refreshed every three years or they lapse. If this happens, the trustee of your super fund will be the one deciding who receives your super death benefit.
4. Boost your other half’s super account
During these two decades a growing family takes priority and your spouse may need to take time off to care for new members of the family.
There can be valuable tax benefits in making contributions into your spouse’s super account, or splitting your contributions and placing some into your spouse’s account.
5. Review your investment option
As your personal circumstances change and you build assets outside super, it’s sensible to regularly review the investment option in which your super savings is invested.
Although you are still many years from retirement and can afford to ride out investment market volatility, it may be worth reviewing how your total portfolio (which includes the money and assets you own outside super), is invested to ensure it remains appropriate.
6. Set a super savings goal
Spend some time thinking about how much you would like to have in your super account when you retire. If you have a clear goal, you are much more likely to achieve it.
Once you have set a goal, you can work out if you need to make additional voluntary contributions to achieve it, or if you super savings are invested in the correct investment option to accumulate sufficient money for retirement.
7. Consider personal tax-deductible or carry-forward super contributions
If you make a voluntary contribution into your super account, you may be able to claim a tax deduction for it and pay less tax on your income. This type of contribution can also make a valuable addition to the balance of your super account in the run up to retirement.
You – or your partner – could also consider making a carry-forward contribution if either of you are not using the full amount of your annual concessional contributions cap. Unused cap amounts can be carried forward for up to five years and could allow you to make a larger concessional contribution in a particular year.
8. Take advantage of free government money
Depending on your income, you could be eligible for a government co-contribution into your super account of up to $500 a year when you make personal contributions to your super fund.
There is also free money on offer if you are eligible for the Low Income Superannuation Tax Offset (LISTO), which was previously called the Low Income Superannuation Contribution. If you’re eligible and earn up to $37,000, this is a payment of up to $500 from the federal government directly into your super account.
9. Consider starting a self-managed super fund (SMSF)
For some people in their 30s and 40s, it can be worth establishing your own SMSF if you are interested in taking more control of your retirement savings. SMSFs allow you to tailor your investment strategy and can be a useful tool if you plan to buy your own business premises. However, it’s important to remember SMSFs must adhere to lots of rules and you will have the ATO looking over your shoulder.
10. Check your employer’s SG contributions
Your employer must be making SG contributions at least quarterly, so it’s important to check with your super fund (or the ATO’s online services through your myGov account) that employer contributions are being paid regularly into your account.
Given the tough conditions facing many businesses in the wake of COVID-19, it may be tempting for your employer not to prioritise paying your super contributions. If you have checked on your SG contributions and the business fails, you are less likely to lose your super contributions as well as your job.
Having up-to-date employer contributions (including salary sacrifice contributions) is also important if you plan to make extra personal super contributions before financial year-end. Otherwise you could accidentally go over your contribution caps.