Super tips and strategies for all ages

Ensure your employer is paying Superannuation Guarantee (SG) contributions regularly into your super account if you are earning more than $450 a month. Some employers are slow to make their compulsory contributions and some don’t make them at all – particularly if the business is in financial difficulties.

Check with your super fund that your contributions are being paid regularly and if not, ask them to follow up or consider reporting your employer to the ATO.

If you plan to make extra contributions before the financial year-end, ensure your employer’s contributions (including salary sacrifice payments) are up-to-date, so you don’t go over your contribution cap.

For more information, see SuperGuide articles:

• Your simple guide to Superannuation Guarantee (SG) contributions
• Superannuation Guarantee rules for employers
• What to do if your employer doesn’t pay your super

2. Decide if your super fund is right for you

At this stage of life, many people are in a super fund due to their employment arrangements – not because they selected it. As you will be with your fund for many years, it makes sense to check whether it’s the right one for you.

Consider features like what investment options it offers and how satisfied you are with the communications you receive from your fund. Compare your fund with similar super funds in terms of the fees you are paying, how your fund has performed over the past five years and whether you can get answers and quick service if you need help. It makes sense to re-asses your fund every 12 to 18 months to ensure it still suits your needs.

For more information, see SuperGuide articles:

• How to compare super funds in 7 easy steps
• Best performing super funds: Conservative category (21–40%)
• Super fees and returns calculator
• How to benchmark your super fund

3. Consider extra contributions

When you start out in your 20s, your budget is usually pretty tight and there are lots of other demands on your salary, but if you can spare a few dollars from your pay packet, it can make a big difference later on.

If you make extra small contributions into your super account now, they have many years to grow and to benefit from compounding (or earning interest on your interest), which can make things a lot easier at retirement time.

For more information, see SuperGuide article Beginner’s guide to making super contributions and What super contributions are best for me?

4. Find any lost super

If you’ve had part-time or casual jobs, make sure you know where all the super contributions made by your different employers have gone.

You can find and manage your super using the ATO’s online services through your myGov account. By linking the ATO to your myGov account, you can see details of all your super accounts (including any you may have forgotten about) and any of your super held by the ATO because it couldn’t be paid into an account.

For more information, see SuperGuide article The easy way to find and consolidate your lost super.

5. Consider combining your accounts

In their 20s, many people end up with multiple super accounts courtesy of having several full-time or part-time jobs. So think about bringing them all together into one super fund to avoid paying fees on each different super acocunt. Take care before closing a super account, however, to ensure you choose the best account when it comes to fees and insurance cover.

For more information, see SuperGuide articles:

• Super tips and strategies for all ages
• The easy way to find and consolidate your lost super
• How to compare super funds in 7 easy steps

6. Set up online access to your account

With online access, you can take a much closer interest in your super savings and check in with your super fund at any time. It also means you don’t have to wait for the yearly or six-monthly statement from your super fund to see how your savings are growing. You can also find out more about how you super fund is investing your money.

7. 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 (after-tax) contributions to your super fund.

For more information, see SuperGuide article How a government co-contribution can help boost your super savings.

8. Review your insurance cover

Most super funds offer members insurance cover for death, total and permanent disability (TPD) and income protection using money in their super account. Although this can be a cheaper way to get the insurance cover you need, it may not match the level of protection you need – either too much or too little. Check your cover to see whether your current cover is right for you.

For more information, see SuperGuide articles: Insurance inside super: A definitive guide and Life insurance through super: A definitive guide.

9. Evaluate your investment option

Many people in their 20s are in their super fund’s MySuper or default investment option, but this may not be the most appropriate one for your particular circumstances. Super is a long-term investment, so you may be willing to take on a little more risk with a Growth option knowing you have a long time to ride out the ups and downs of investment markets.

Consider how your investment option – especially the MySuper one if you have not made an investment choice – is invested and how it has performed against similar investment options in other super funds.

For more information, see SuperGuide articles:

• How to benchmark your super fund
• Super control: How to change your investment option
• Super fund performance: Monthly returns to June 2020

10. Check out the First Home Super Savers (FHSS) Scheme

The FHSS Scheme is a government initiative that lets you save for your first home using the super system. With a lower tax rate on investment earnings, it may be a good alternative to keeping your savings in a bank account for some people and it may help you to fast-track your deposit. There are important rules governing the FHSS scheme, however, so make sure you understand them before signing up.

For more information, see SuperGuide article How does the First Home Super Saver Scheme (FHSSS) work?

Tips for your 30s and 40s

Super isn’t a set and forget investment and it’s important in these decades that you keep an eye on it. Your 30s and 40s can bring big life decisions like starting a family or buying a home, so ensure your super choices remain on track to help you achieve your retirement goals.

1. Save on your tax bill

With your salary slowly increasing, these decades can be a good time to consider setting up a salary sacrifice arrangement with your employer. If you make extra contributions from your pre-tax salary into your super account, you not only increase you super balance, you may also reduce your annual bill, as concessional (before-tax) contributions are taxed at the lower rate of 15%.

For more information, see SuperGuide article Salary sacrifice and super: How does it work?

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 circumstances. 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 insurance from the money in your super account, it can be a cost-effective way to get insurance protection if your family budget is stretched.

For more information, see SuperGuide articles: Insurance inside super: A definitive guide and Life insurance through super: A definitive guide

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. Some funds also allow you to make a binding nomination, but these need to be refreshed every 3 years or they lapse.

For more information, see SuperGuide articles A simple guide to what tax is payable on super death benefits and What makes superannuation super? 10 hidden perks you need to know.

4. Save on your tax bill

Although your employer is required to make regular SG contributions into your super account, if you make extra super contributions from your pre-tax salary (salary sacrifice contributions) into your super account, you may reduce your annual bill. Concessional (before-tax) contributions are taxed at a rate of 15%, which for many people is less than what they pay on their salary and wages.

For more information, see SuperGuide article Salary sacrifice and super: How does it work?

5. 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 of new additions. 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.

For more information, see SuperGuide article Contribution splitting: How to boost your spouse’s super.

6. Review your investment option

As your personal circumstances change and you build assets outside super, it may be sensible to review the investment option in which you super savings are 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 outside super), is invested to ensure it remains appropriate.

For more information, see SuperGuide articles:

• How to benchmark your super fund
• Super control: How to change your investment option
• Super fund performance: Monthly returns to June 2020

7. 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.

For more information, see SuperGuide articles Super tips and strategies for all ages and How to plan for your retirement.

8. Check you employer’s SG contributions

Make sure your employer is paying your SG contributions regularly into your super account. Employers must pay you super if your are earning more than $450 a month. Some employers are slow to make their compulsory contributions and some don’t make them at all – particularly if the business is in financial difficulties.

Check with your super fund to ensure your super contributions are being paid regularly, and if you plan to make extra contributions before the financial year-end, ensure your employer’s contributions (including salary sacrifice contributions) are up-to-date so you don’t go over your contribution caps.

For more information, see SuperGuide articles:

• Your simple guide to Superannuation Guarantee (SG) contributions
• Superannuation Guarantee rules for employers
• What to do if your employer doesn’t pay your super

9. Consider a personal tax-deductible super contribution

If you make an voluntary personal super 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 increase make a valuable addition to the balance of your super account in the run up to retirement.

For more information, see SuperGuide articles How do tax-deductible superannuation contributions work? and 2020/21 guide to non-concessional contributions (after-tax super contributions).

10. 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 (after-tax) contributions to your super fund.

For more information, see SuperGuide article How a government co-contribution can help boost your super savings.

Tips for your 50s

In the years before retirement, it’s time to think about the lifestyle you would like in retirement. There’s still time left to boost your super account if necessary, but you may need to change the way your super is invested as you wind down from the workforce.

1. Save on your tax bill

If your expenses are a bit lower because the mortgage is paid off or the kids have left home, now can be a good time to boost your super account by setting up a salary sacrifice arrangement with your employer if you don’t already have one. If you make extra super contributions from your pre-tax salary into your super account, you not only increase your super balance, you could also reduce your annual bill.

For more information, see SuperGuide article Salary sacrifice and super: How does it work? and What super contributions are best for me?

2. Reassess your investment option

In your 50s, you will have a better idea of when you are likely to leave the workforce and how much you will need when you are no lower receiving a regular salary. That means it’s a good time to reassess your current investment strategy to work out if it’s the right one to achieve your retirement goals.

It’s also be a good time to learn more about investing in your retirement and  about the different tax rules that apply when accessing your super benefits at difference ages.

Check if you will qualify for the Age Pension or Commonwealth Seniors Health Card as these government benefits could make a real difference to how much you need in your retirement.

For more information, see SuperGuide articles:

• Choosing an investment option (investment choice)
• Super investing: How to change your investment option
• How do I apply for the Australian Age Pension?
• Commonwealth Seniors Health Card: What is it and how to apply

3. Review your insurance cover and beneficiaries

During their 50s, most people’s financial commitments lessen and the mortgage may be paid off. Now is a good time to consider whether you need to change your insurance cover within super. Some people, of course, need to increase their cover because they have a new family and young children.

Divorce or separation may mean the insurance beneficiaries you named a few  years ago are now no longer appropriate. Check your nominated beneficiaries so your benefit doesn’t end up with a former partner, or a new financial dependant misses out. Also consider a non-lapsing death benefit nomination if it’s available, as a binding nomination expires after three years if you don’t renew it.

For more information, see SuperGuide articles: Insurance inside super: A definitive guide and Life insurance through super: A definitive guide.

4. Consider how you want to receive your super benefit

In the final sprint to retirement, it’s sensible to start thinking about how you want to receive your super benefit – lump sum, income stream or a combination of both. That way you can think about what strategy will suit you best and what actions you need to take in the final years of your working life.

Check when you will reach your preservation age and are able to access your super benefit. Consider whether it may be better to wait until you are age 60 to access your savings, as most people can take their super benefit tax-free at that age.

For more information, see the following SuperGuide articles:

• How to plan for your retirement
• Starting a pension from your super
• Your tax guide to accessing your super under age 60

5. Consider getting independent financial advice

For some people, now can be a good time to talk to an independent financial adviser about your retirement plans. They can help you work out how much you are likely to have in retirement, if you need to make additional contributions in the next few years to reach your retirement income goal and explain any tax you will need to pay when you receive your super benefit.

For more information, see SuperGuide articles Super advice: How to find a suitable financial adviser and Retirement planning: How much does financial advice cost?

6. Make tax deductible contributions

In your 50s, many people’s income is still high, so it can make sense to top up your super account with some voluntary super contributions. You may be able to claim a tax deduction for them as well, leaving you with a lower tax bill.

For more information, see SuperGuide article How do tax-deductible superannuation contributions work?.

7. Consider a transition-to-retirement strategy.

If you are aged 55 or over, consider starting a transition-to-retirement (TTR) pension, as they allow you to reduce your working hours while using income from your super to maintain your lifestyle.

For more information, see SuperGuide article Guide to transition to retirement pensions (TTRs or TRISs).

8. Check if you can make a small business contribution

If you are planning to sell your small business prior to retirement, you may be able to reduce your capital gains tax (CGT) bill and top up your retirement nest egg by using the Small Business Retirement Exemption to make a contribution into your super account.

For more information, see SuperGuide article SMSFs and the Small Business Retirement Exemption.

9. Consider bringing your contributions forward

If you want to give your super account a last minute boost, consider making a large non-concessional (after-tax) contribution. Under the bring-forward rules, you can use three years of your non-concessional contribution cap ($100,000 in 2018/2019) to make a larger contribution into your super account.

For more information, see SuperGuide article A super guide to understanding the bring-forward rule.

Tips for your 60s and 70s

1. Check the rules for accessing your super

Once your reach your 60s, the rules for accessing your super change – and so does the amount of tax your will pay when your take your benefit.

For more information, see SuperGuide article Over age 60? A simple tax guide to accessing your super benefits.

2. Consider a transition-to-retirement strategy

If you are in your 60s, it still makes sense to consider starting a transition-to-retirement (TTR) pension as it will allow you to reduce your working hours while using income from your super to maintain your lifestyle.

For more information, see SuperGuide article Guide to transition to retirement pensions (TTRs or TRISs).

3. Contribute to receive a government co-contribution

If you are working less hours and earning a lower income, check if you are now eligible for a government co-contribution into your super account.

You could be eligible for a co-contribution of up to $500 a year when you make personal (after-tax) contributions to your super fund. If your total superannuation balance is greater than $1.6 million, however, you will not be eligible for co-contribution scheme contributions.

For more information, see SuperGuide articles How a government co-contribution can help boost your super savings and What is included in my Total Superannuation Balance, and when does it apply?.

4. Reassess your investment option

Once you are in your 60s and retirement is either around the corner or you have already retired, it’s definitely time to review your investment strategy and check the level of risk you are taking with your super or pension savings. It is also a good time to check the different tax rules that apply to accessing your super benefits now you have reached your preservation age and turned 60.

Check if you will qualify for the Age Pension or Commonwealth Seniors Health Card as these government benefits could make a difference to how much you need in your retirement.

For more information, see SuperGuide articles:

• Choosing an investment option (investment choice)
• Super investing: How to change your investment option
• How do I apply for the Australian Age Pension?
• Commonwealth Seniors Health Card: What is it and how to apply

5. Think about bringing your contributions forward

If you want to give your super account a last minute boost, consider making a large non-concessional (after-tax) contribution. Under the bring-forward rules, you can use three years of your non-concessional contribution cap or limit ($100,000 in 2018/2019) to make a larger contribution into your super account before your reach age 65.

For more information, see SuperGuide article A super guide to understanding the bring-forward rule.

6. Consider making a downsizer contribution

If you are aged 65 and over and are ready to downsize, or simply want to put more into your super account and are willing to sell your current home, it could be worth considering a downsizer contribution. These contributions allow a couple to invest up to $600,000 ($300,000 each in 2018/2019) from the sale proceeds of their family home into their super account.

For more information, see SuperGuide article Downsizer contributions: How do they work and what are the current rules?

7. Ensure you meet the work test before contributing after 65

Although anyone under the age of 65 can make both concessional and non-concessional contributions into their super account even if they are not working, once you reach age 65 you must meet the conditions of a work test to make some types of contributions.

For more information, check out the following SuperGuide articles:

• How to contribute to your super in your late 60s: What are the rules?
• Work test: Making super contributions over 67
• How to make super contributions after you’ve retired
• What are the super and retirement rules for the over-65s?

8. Work out your retirement budget

Before you retire it’s important to work out a budget for your retirement years so you know how much you will have to spend each year. Work out how long your super will last and what lifestyle you can afford with the money you have saved.

For more information, see SuperGuide articles How much super do I need to retire? and Retirement cost of living: How much does a comfortable lifestyle cost?

9. Take your super after age 65

Consider leaving your super in your super account if you are still working and not keen to retire. Once you hit age 65, you can access your super balance any time you wish, as reaching that age is considered a condition of release and allows you to take your super benefit without having to retire.

For more information, see SuperGuide articles When can I access my super? All conditions of release explained and Accessing super: Ceasing employment after 60