The sprint finish: How to boost your super before retirement

Many of us don’t start to seriously plan for our retirement until it’s on the doorstep, but that doesn’t have to mean it’s too late.

These strategies can help with your sprint to the finish line, even if your current balance makes you want to shut your eyes and hide under the covers.

Don’t have any spare cash you could save or outside investments you can add to super? There’s something here for you too.

Transition to retirement

If you’re 60 or older and still in the workforce, combining a transition-to-retirement (TTR) pension with salary sacrifice or tax-deductible super contributions can give your super a welcome boost. What’s more, it doesn’t have to hit your hip pocket. 

Once you turn 65 you can use the same strategy with a standard super pension, rather than a TTR.

This strategy works because the income you draw from super is tax free while the contributions you make are taxed at the low rate of 15%*.

The effect is that you can maintain the same take-home pay but have more going into super than you are withdrawing thanks to the tax concessions.

*An additional 15% tax applies if your income plus concessional super contributions exceed $250,000 for the year. If you’re a member of an untaxed (constitutionally protected) fund such as SuperSA, West State Super or Gold State Super the tax position for both contributions and withdrawals is different. It is important to seek specific financial advice.

The maximum that can be withdrawn from a transition-to-retirement pension is 10% of its balance each year. When using this strategy, you can top up your pension account annually with the savings that have been accumulating from your contributions to maximise the amount available to withdraw (if required).

This involves a bit of admin because you can’t add directly to a pension account, so you need to transfer the balance of the existing pension back into the account holding your contributions and use the combined balance to start a new pension. Some providers have a single form that covers the whole process.

Once you turn 65, a TTR pension can be converted into a retirement pension, even if you’re still working. A retirement pension has no maximum annual withdrawal and generates tax-free investment earnings, compared with up to 15% tax on earnings for a TTR.

Combining payments from a retirement pension with concessional contributions in the same way you would for a TTR can do even more to boost your balance because you can make the maximum concessional contribution that is tax effective and withdraw as much as you need to replace that income from the pension. Tax-free investment earnings also give you an extra push.

It is also important to be mindful of the concessional contribution cap, as salary sacrifice and personal tax-deductible contributions as well as your employer’s Super Guarantee payments all count towards your annual cap amount.

Carry-forward concessional contributions