How can you grow your super?
Thinking about retirement is not only for retirees. You may feel you’re too young or haven’t acquired enough money in super to do anything about it now. It might seem easier to delay planning until you’re older, but the odds are stacked against those who leave it until later in life.
Some people want a retirement that reaches beyond just ‘surviving’, but feel overwhelmed or frightened at the steps they need to take to get there. So they do nothing. Some people think that if their employer is already contributing to super on their behalf, they don’t have to worry. So they do nothing. It’s time to do something! To start, here are a few easy ways to grow your super:
1) Find your lost super
It’s estimated that one in every three workers has some lost super. Search for your share of the $9.7 billion in lost super listed at the Australian Tax Office by clicking here. All you need is your name, date of birth and tax file number. The search is free, so what have you got to lose? Once you have located your lost super, you can consolidate it into one super account.
2) Consolidate your super
Is your super all over the place? You’re not alone. Australian workers have more than 25 million super accounts! So, chances are, if you have worked for more than one employer you may well have more than one super account. Consolidating, (sometimes called “rolling over”) your super into one account can reduce the number of fees you pay and will make it easier to keep track of and manage. Consolidating your super into your ING account is easy, simply click here.
3) Make extra contributions
One way to give your retirement prospects a boost is through making extra contributions. There are two ways to make extra contributions to super:
Salary sacrifice (pre-tax) contributions
Salary sacrifice is an agreement between you and your employer to forgo part of your future salary, which your employer then contributes into your superannuation account. The ‘sacrificed’ portion goes directly into super, so it is not subject to your marginal income tax rate (which could be up to 46.5% including Medicare Levy), but is taxed at the contributions tax rate of 15%. To set up a salary sacrifice arrangement simply talk to your employer. They will be able to tell you if they offer this facility and what you need to do to set it up.
Click here for more information.
Please note, there is a single annual concessional contributions limit of $50,000. Concessional contributions include compulsory super (SG) and salary sacrifice contributions. However, an annual limit of $100,000 will apply for people aged 50 and over, for a transitional period of five years ending 1 July 2012. Amounts contributed in excess will be taxed at 46.5% or more!
Voluntary (after-tax) contributions
These are also referred to as ‘undeducted’ contributions. This is when you have a regular or one off payment going into your super account from your after tax income. You can make after tax contributions via BPAY or Internet Banking. To find out how to make contributions to your Integra or Corporate Super account click here.
An additional benefit of making after tax contributions to super is that you may be eligible for the Government Super Co-contribution. Click here for more information.
There is an annual limit of $150,000 on after-tax contributions which applies. If you are aged under 65, you can bring forward two years of after-tax contribution entitlements, meaning you can contribute up to $450,000 over three financial years without exceeding the limit. Amounts exceeding this will be taxed at 46.5% or more!
Remember, once you put money into super it generally must remain there until you retire. This is referred to as being ‘preserved’.