3 ways to boost your super and before retirement
3 effective ways to boost your super and prepare for retirement (2 min read)
Key takeaways:
- Salary sacrifice (Pre-tax contributions)
- Personal deductible contributions (Lump sum pre-tax contributions)
- Non-concessional contributions (After tax contributions)
Some people may be aware of the ability to make additional contributions into their super. But many may ask: what type of contribution should I make? Is it tax effective for me? How much should I contribute? You may have heard of the term Salary sacrificing (when you forego part of your salary into super to reduce tax) this is completed on an regular basis, whether weekly, fortnightly or monthly, this can easily be organised through your employer.
However there are other options available that may be appropriate for people who are approaching age 55-60. Personal deductible contributions are lump sum contributions made into super where you may be able to claim the full amount as a tax deduction in your personal tax return. It can be quite appropriate for those who anticipate some large capital gains tax in the financial year.
The other is known as Non-concessional contributions (NCC) or after-tax contributions. From 1 July 2021, non-concessional contributions will be capped at $110,000 per financial year. After-tax contributions and are also an effective way to increase your super. Although it does not have the same tax savings as the above two, it is a great strategy to boost your super before you wind down from work and turn on a pension. When your super is in a pension account, the funds are effectively in a tax-free environment where there is no tax on investment earnings.
Furthermore, when you are over the age of 60 there is no tax applicable when you draw the funds out as a regular pension or make a lump sum withdrawal.
If you want to learn more, feel free to talk to one of our financial planners and financial advisors.
