Your superannuation is very important as it will help you fund your lifestyle in retirement.
And, with data from the Australian Bureau of Statistics suggesting Australians are now living longer than ever before*, the number of years we spend in retirement is increasing.
As such, it is critical that we give our superannuation the love and attention it deserves while we can. There are three easy steps we can take to boost our superannuation balance so that we have more money heading into our twilight years.
These steps include:
- Add more money to your super
- Consider your tax concessions
- Invest in high performing assets
By following these steps, you'll be able to give your superannuation balance the boost it deserves and ultimately get more out of your super once you retire.
Step 1 – Add money to your super
This is the starting point to get your super back on track and it is an easy step over which you have total control.
All you have to do is work out how much you can afford to save from each pay and commit to investing it into your superannuation fund.
Alternatively, you can salary sacrifice a portion of your regular income into your superannuation fund. One major benefit associated with making salary sacrificed super contributions is that they are taxed at 15%, which is likely to be lower than your marginal tax rate. And, because any super contributions come out of your before-tax income, they are not counted as assessable income for taxation purposes. This is a simple way to save on tax and build your wealth, as more of your income is put towards growing your superannuation.
Step 2 – Use tax concessions wisely
How you grow your super needs to be in line with your financial circumstances and end goals. You need to think about how much you can save, whether to make a personal after-tax contribution or salary sacrificed contribution.
If you do choose to make salary sacrificed super contributions, you need to be careful not to exceed the allowable caps on contributions as tax penalties apply if you do.
Step 3 – Invest in high performing assets
Your superannuation is just a structure in which to hold assets such as cash, fixed interest, shares and property.
Your financial adviser can help you can look at your investment options and decide which options will best suit your preferences and needs.
For example, investing in shares and property has the potential to produce higher returns, but also comes with higher risk.
When determining your investment strategy, you should take into consideration your age, how comfortable you are with investment risk, as well as your retirement goals before selecting the appropriate investment options.
While most people will benefit from a mix of assets to spread the risk, everyone is different.
Putting in place strategies to make your super grow faster may help you to have a more comfortable retirement. Of course, making your super grow is only part of the decision on how to use super most effectively. You may also need to make decisions about which fund to use, levels of insurance cover and nominations for death benefits.
At the end of the day, the best thing you can do is speak to your local financial adviser to find out more about your super options and the strategies you should implement to grow your balance.