As we age, the importance of a secure and comfortable retirement becomes increasingly clear. For many Australians, superannuation is the key to unlocking that future. Yet, despite its significance, a staggering number of us are neglecting our super accounts, potentially costing ourselves a small fortune by the time we retire. But fear not, because with a few savvy moves, you can significantly bolster your super and ensure a more prosperous retirement.
The Super Members Council has recently highlighted the urgency for Australians to engage with their superannuation. Their research shared exclusively with Yahoo Finance, reveals that while 80% of Aussies acknowledge the critical role of super in retirement, less than half check their super account more than once a year. This lack of attention could be detrimental to your future financial health.
Georgia Brumby, deputy CEO of the Super Members Council, emphasises the lifetime benefits of being proactive with your super. ‘Australians understand how important super will be to their future – giving them more opportunity and choice to live the life they want in retirement,’ she says. ‘But the more you know about super, and the more engaged you are with your super, the better you can make super work for you.’
So, what can you do to take control of your super and potentially add a whopping $67,000 to your retirement fund? Here are four quick tips that could make a significant difference:
- Ensure You’re Getting What You’re Owed: Unpaid super affects one in four workers annually, costing a collective $5 billion. Verify with your super fund that you’re receiving the correct contributions from your employer.
- Consolidate Your Super Accounts: Managing multiple super accounts can be confusing and costly due to fees. Consolidate your super through the ATO online via myGov to save on fees and simplify your finances.
- Choose a Top-Performing Fund: The most crucial metric for super funds is their investment returns after fees. Use the ATO’s comparison tool for MySuper products to ensure you’re with a fund that maximises your returns.
- Make Extra Contributions: If you’re able, additional contributions to your super can have substantial long-term benefits. For example, a 30-year-old on an average income who starts salary sacrificing $20 a week could see an extra $67,000 in their super by retirement, along with immediate tax savings.
For lower-income earners, there are additional incentives to explore. The government offers a low-income tax offset (LISTO) of up to $500 a year for those earning $37,000 or less. Additionally, if you earn $60,400 or less and make personal after-tax contributions to your super, the government may match 50% of your contribution. To receive the maximum co-contribution of $500, you must contribute $1,000 yourself, and your income needs to be under $45,400.
Looking ahead, major superannuation changes are on the horizon for 2025. The super guarantee rate will rise to 12% on July 1, 2025, meaning employers will contribute more to your super. This will be the final legislated increase to the compulsory superannuation guarantee rate, raising it from the current 11.5 per cent. Additionally, superannuation will be paid on parental leave pay from the same date, and couples will have access to an increased 24 weeks of leave paid at the national minimum wage.
We’d love to hear your thoughts and experiences on managing superannuation. What strategies have worked well for you? Feel free to share your tips in the comments below to help others make the most of their retirement savings.
Also read: Boost your superannuation with the government’s co-contribution scheme
