3 simple ways to save more super before you retire

7 December 2022

Whether retirement is a while off or right around the corner, it’s never too early or late to add more to your super. There are simple ways to maximise your balance while you’re still earning a regular income, so you’ll have more for your best retirement.

During your working life, most people get a super contribution from their employer – known as the Superannuation Guarantee (SG). Your employer must pay a minimum percentage of your earnings into your super account.

But you can also choose to add more money to your super. Making extra contributions can help boost your super balance and save on tax. Your super balance also stays invested so any investment returns you receive benefit from compounding too – this means investment returns generated on the returns you’ve already earned.

HOW COMPOUNDING GROWS YOUR SUPER

Making extra voluntary contributions to your super account can have a big impact on your final super balance and your retirement lifestyle. Explore 3 simple ways you can add more to your super¹ .

1. Add to your super before tax through salary sacrifice

You can make before-tax super contributions on top of your employer's SG payments. This is called salary sacrificing (a type of ‘concessional’ contributions) which means your employer pays a portion of your salary directly into your super account rather than into your bank account². 

Aside from boosting your super balance, there are tax benefits to salary sacrificing too:

• The tax rate may be lower. The tax rate for salary sacrificing into your super account is 15%. However for higher income earners, this could be 30% if your combined income plus concessional super contributions are more than $250,000. However, the income tax rate for the salary you take home can be as high as 47%.
• You reduce your taxable income. By putting more of your salary into super, you can decrease your taxable income – and that could mean more savings at tax time.

Your tax savings depends on how much you contribute to your super and your individual tax rates.

FIND OUT MORE: SALARY SACRIFICING

2. Add to your super after tax from your take-home pay

Making an after-tax super contribution (known as a non-concessional contribution) is something you can do at any time (subject to your age and contributions limits)¹. It’s where you pay money directly into your super account from your bank account. There are several benefits to adding to super after tax:

• You’re not locked into making regular extra super contributions, so you can top up with one-off payments when it suits you.
• It’s a way to add more to your super if your employer doesn’t offer salary sacrifice.
• There's a higher cap on after-tax contributions compared to those made before-tax.
• You can claim a tax deduction on after-tax contributions up to the concessional contributions limit of $27,500 a year. Just make sure you contact your super fund and submit a Notice of intent to claim a tax deduction form, before you lodge your tax return.

As an AustralianSuper member, you can contribute to your super account quickly and easily from the AustralianSuper mobile app.

FIND OUT MORE: AFTER-TAX CONTRIBUTIONS

3. Get your partner to boost your super

Your partner can keep your super balance growing if you take a break from work or reduce your hours for any reason. This is known as a spouse contribution. Not only does your super get a boost, it can also be tax-effective for your partner:

• Your partner may be eligible for a tax offset if they contribute up to $3,000 to your super as an after-tax payment (non-concessional contribution). If you earn less than $37,000 a year, they can get a maximum offset of $540, and this gradually reduces until you earn $40,000 or more.
• If your earnings are under $37,000 a year, they can claim the maximum tax offset of $540.

Your partner can also split their pre-tax super contributions with you (concessional contributions). Contribution splitting or ‘super splitting’ means your partner can pay up to 85% of these contributions into your super account from theirs once a year.

This could include super contributions made by:

• your partner’s employer
• contributions your partner has arranged through salary sacrificing
• contributions your partner has claimed as a tax deduction

When making before or after-tax contributions, be mindful of the contribution limits that apply. Exceeding these limits may mean you pay extra tax.  

FIND OUT MORE: SPOUSAL CONTRIBUTIONS

Get a government co-contribution if you’re a low-income earner

If you have a low income, you may be eligible for an additional contribution from the Federal Government when you make after-tax contributions to your super. 

The government will match 50 cents for every $1 you add to your super from your after-tax income (up to a maximum of $500 a year) if you: 

• make after-tax contributions to your super,
• earn $42,016 or less a year before tax (financial year 2022-23), and
• meet other eligibility criteria.

If you earn more than $42,016 in the financial year 2022-23, the matching rate gradually reduces until it phases out completely at $57,016.

Everyday spending and your super  

Keeping an eye on your spending as you approach retirement can help you understand your budget and allow you to put more into super. You can review your everyday spending, by using free budgeting tools, and checking your bank statements and any household bills you receive. To see the difference small, regular contributions could make to your final retirement income, use our Super Projection Calculator.

Consolidate your super and save on fees 

It’s also a good idea to check if you have more one super fund. Multiple super accounts mean multiple fees which can chip away at your balance so it could be worth getting your super accounts all together.³

CONSOLIDATE YOUR SUPER

Head towards retirement with confidence and take control of your super savings by adding to your super today.