How to play superannuation catch-up

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At Beam, we’re extremely passionate about women’s financial independence. Part of the reason we push for part-time work is that it can help keep women in the workforce, even during the early child-raising years. And that means that even when childcare seems to sap a household’s income, super is still being tucked away. Lumix Wealth writes about how to make the most of your super.

Are you a woman who has taken time out of the workplace to raise your children or to look after ageing parents? Have you returned to a part-time role so you can balance your home and work life?

If this is you – you are not alone. This is the scenario many Australian women face, which can leave us lagging behind our male counterparts, earning less and amassing lower super balances. Research has shown we will live longer and most likely retire earlier than men, but to do this comfortably we need bigger retirement nest eggs.

However, all is not lost.

With some careful planning and financial discipline, you can make up for lost time when it comes to your super.

The sooner you invest in your super savings, the more quickly you will benefit from the magic of compounding!

Here are our key steps to growing your super balance:

  1. Find your lost super – you may have a super account from a previous job that you didn’t know about. More than one super account often means a duplication of fees and charges. If you have more than one super account, consider consolidating your money into a single fund, but it is important to understand the impact of doing this.
  2. Understand your super – knowledge is power. Know where your money is invested, what your investment option is, understand your investment time horizon and the amount of risk you are comfortable with. Your investment option should be consistent with the level of risk you are prepared to take and the time frame you have until you retire.
  3. Understand whether you have any insurance linked to your super account and consider this before closing any super account.
  4. If you can afford to salary sacrifice, set up a salary sacrificing arrangement with your employer, so some of your pre-tax earnings can go straight into super. Your employer will also be contributing 9.5% of your salary into super in the form of Super Guarantee (SG) contributions. These contributions, along with any additional salary sacrifice contributions, are known as concessional contributions. You are able to contribute a maximum of $25,000 per year by way of concessional contributions.
  5. If you are able to, contribute to super out of your own pocket. These are after tax contributions or also known as non-concessional contributions. There are rules around the amount of non-concessional contributions you can make on an annual basis, but in general there is a $100,000 limit per annum.
  6. If you earn less than $51,813 per year and make non-concessional contributions to your super, you may be eligible for a co-contribution from the government. The maximum co-contribution is $500 and to receive the co-contribution you will need to lodge a tax return for the year.
  7. If you earn less than $37,000 per year, you may also get the ‘low income tax offset’. The maximum amount of the low income tax offset is $500 and it will automatically be paid into your account if your super has your tax file number.

We are great believers in the power of these small steps to change your financial future.

Get started today.

This article has been written by Lumix Wealth, financial planning for women by women. So smart! Find out more here.

Important information

Spinifex Financial Planning Pty Ltd (ABN 67908143620) trading as Lumix Wealth is an authorised representative of Financial Wisdom Limited ABN 70 006 646 108, AFSL 231138.  This document contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial adviser before making a financial decision. Information in this document is based on current regulatory requirements and laws as at  December 2017, which may be subject to change. While care has been taken in the preparation of this document, no liability is accepted by Financial Wisdom, its related entities, agents and employees for any loss arising from reliance on this document.

This article was first published on No More Practice Education

Photo by Ulises Baga on Unsplash

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