How can I maximise my super?

Key points

• Maximising your super will allow you to live more comfortably in retirement
• There are strategies you can investigate depending on your circumstances to optimise your funds
• You can also make use of the advice and support that your super fund will likely provide for free

General information on super is available from many different sources, including through financial advisors and online research, but applying this to your personal situation can be tough.

Although you build up your superannuation over the course of your working life, there are extra steps you can take to boost those savings before and during retirement so you don’t run out of super in retirement.

The key factors you need to establish before assessing how your super is performing are:

• How much money you will need for your retirement
• Whether you are on track for the retirement you want
• What you can do to put yourself on the right track
• How long your super will last to achieve your retirement goals 

This will depend on other important factors, such as when you want to retire, how you want to live in your retirement and where you live.

Jacki Ellis, Head of Retirement at Aware Super, says one of the best things you can do during retirement planning is to make use of the services your super fund offers.

Most super funds should have a broad range of information available on their website, including digital calculators and tools. Most importantly, they provide free advice on super investment for non-complex cases.

This support can help you to figure out any salary sacrifice or tax offset options you might be able to use, as well as the impact that spouse contributions may have on your super balance.

If your situation is more complex, your super fund will likely offer more comprehensive advice for an extra fee.

“Making use of services like these can make a world of difference not only to your retirement outcome but to your confidence as you near and enter retirement, ensuring you have one less thing to worry about at a time of major change,” Ms Ellis explains.

You could also seek professional advice from a financial advisor that specialises in retirement planning.

Disclaimer: The information in this article is generic in nature and readers should consider seeking independent financial, legal or other advice to suit their unique circumstances. 

Boosting super

As you approach retirement you can make additional contributions to your super which boost your funds and, as a bonus, are also tax effective as they reduce your taxable income.

For example, if you’re on a marginal tax rate of above 15 percent you could save on tax as contributions of up to $27,500 in a financial year (including contributions from your employer) are tax-deductible. Known as concessional contributions, they are taxed at a maximum of 15 percent, assuming you earn less than $250,000 a year.

Couples where one partner is already receiving an Age Pension but the other is still too young to receive it may also benefit from making more contributions to super in the name of the younger partner. Money held in the younger partner’s super fund is not counted under the asset test until that person is at Age Pension age.

While these seem like wonderful options, it is still necessary to take into account several factors before making extra contributions to make sure this is the right step for you.

You need to consider your broader financial goals, such as how much money you will need for retirement, how much money you realistically need for ongoing expenses in the short term, and how the concessional contribution cap might affect you.

Similarly, consider whether you would have to access your super early in the case of an emergency. It is possible for people to access up to $20,000 in super before turning 65, however, experts say that if a 30-year-old were to withdraw that much money, they would ultimately have $60,000 less when they reach retirement age.

While your super may not be impacted as much due to your age, short-term and long-term planning is essential.

It’s best to contact your super fund for advice on strategies to maximise your funds. 

Changing accounts

Your provider can also give advice on when to access your super and what type of account is best for your current situation.

For example, an account-based pension provides regular tax-free income and investment earnings for retirees, as well as the flexibility to take extra cash payments if you need them.

But another option is to keep your existing super account open, which is likely an accumulation account, and only make lump sum withdrawals. You would continue to pay 15 percent tax on investment return with this option but you wouldn’t have to meet the minimum income drawdown as you need to with an account-based pension.

If you’re still working but you’ve reached your preservation age, a transition to a retirement account is also an option. 

This enables you to receive an income from your super while continuing to work. You can also contribute more to your super at the same time as a tax-effective way of building your nest egg.

Ms Ellis says no matter the account option you choose when you retire, you must keep in mind it is important to stay invested.

“Our modelling shows that around one third of your income from super is likely to come from the investment returns you earn after you’ve retired,” she says.

So it’s still critical that you’re with a strong-performing fund with competitive fees even when you’re no longer working.

“Take the time to check your super fund is delivering for you.”

Super fund members who seek out advice on their investments, Ms Ellis says, also are more likely to consolidate and simplify their finances – avoiding multiple fees, making voluntary contributions at a higher rate, making the most of Centrelink benefits, and ultimately having more income in retirement.

“We urge people who are looking at strategies to maximise their super or retirement income to contact their fund and take advantage of the advice and guidance services on offer,” adds Ms Ellis.

What strategies do you use for maximising your super? Tell us in the comments below.

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