Super contributions
Grow your nest egg
If you want to retire comfortably your employer's 9.5%
contributions may not be enough to build your nest egg.
By making extra contributions, you will boost the amount of
super you have when you stop working. The key is to start now so
you can relax later.
Why grow your super?
There are lots of good reasons why you should grow your super as
much as possible:
- You might live to be 100 so your money needs to last
- The cost of living will increase over time
- The age pension alone will not be enough for
a comfortable lifestyle
- The tax benefits of super make it a good way to invest
- You might be eligible for bonus contributions from the
government
Before you throw all your money into your super fund, look at
your finances as a whole. If you have credit card debt or home loan
repayments, you need to work out if it's better for you to pay off
these debts first before you put money into super.
Read our super vs mortgage webpage to find out
where to direct your spare money. You can also use our super vs
mortgage calculator to crunch your numbers.
Super vs mortgage calculator
Ways to boost your super
Your employer puts 9.5% of your salary into your super. See employer contributions for more
information. You can do your bit to grow your super in the
following ways.
Sacrifice some of your salary
This is when you and your employer agree to pay a portion of
your salary as an extra contribution to super. This can be a
tax-effective strategy if you earn more than $37,000 per year.
Make after-tax super contributions
You simply deposit your personal money into your super. These
are called after-tax super contributions. This is different from
salary sacrificing, which happens before your income is taxed.
Government co-contributions
If you earn less than $51,021 per year (before tax) and make
after-tax super contributions, you are eligible to get matching
contributions from the government. This is called the government
co-contribution.
If you earn less than $36,021 the maximum co-contribution is
$500, based on 50c from the government for every $1 you contribute.
The amount of co-contribution reduces as your earnings
increase.
Low income super contribution
If you earn up to $37,000 you may also get a 'low income super
contribution' of up to $500 from the government. You will get this
payment whether or not you add extra money to your super. The ATO
will automatically make these payments if you meet the criteria.
See low income super
contribution.
Self-employed super contributions
If you're self-employed, you can claim a tax deduction when you
contribute to your super, up to a limit. If you don't put money
into super, you may have nothing when you retire. See super for self-employed
people.
Contribute for your
spouse
You may be able to claim an 18% tax offset on super
contributions of up to $3,000 you make on behalf of your
non-working or low-income-earning spouse.
Go to the Australian Taxation Office (ATO) for the rules on the
superannuation spouse contribution tax offset.
You can also split your employer super contributions with your
spouse. Contribution splitting can only be done after the end of
the financial year. Your super fund will be able to guide you
through the process. See the ATO's fact sheet on contributions
splitting.
Case study: Lei builds her super
Lei,
40, is working part-time after taking some time off to have her 3
children. During the 10 years she was a full-time mum, no
contributions were made to her super. Lei is worried that she won't
have enough super when she retires.
After talking with her husband, they decide to take advantage of
the spouse super-splitting rules. Each year Lei's husband will
divide his employer's super contribution between his fund and
Lei's. This will help her build her nest egg.
Work out your best mix of super
contributions
If you can afford to contribute more to your super, use the
super contributions optimiser to work out the best way to grow
your nest egg.
Super
contributions optimiser
Making extra super contributions is a great way
to boost your super savings. Then you'll have the money you need
for a happy and comfortable retirement.
Related links
Last updated: 02 Aug 2016
