Advice can save you more
Research shows1 people who get advice about their super are more likely to make additional contributions and have a better standard of living when they retire. Sounds good? Find out how we can help.
How much is enough?
Everyone’s plans for retirement are different. When you’re asking how much you’re going to need to save, it’s not the easiest question to answer without a more detailed picture of what retirement is going to be like for you - where you’ll live, whether you’ll travel, spend time with family or work part-time.
To give you an idea, current figures from the Association of Superannuation Funds of Australia2 allow an annual income of around $60,000 for a couple to live a comfortable lifestyle in retirement. They’ll have enough to enjoy recreation activities, have private health insurance, own a reasonable car, buy household goods when they need them, and take regular holidays.
A little extra now, for more later
Depending on your situation, your employer contributions alone may not be enough for you to live like this in retirement. So you may want to find a way to boost your super savings with extra contributions. The sooner you start, the more of an impact additional payments are going to make.
Making extra contributions from your pre-tax salary can be a great way to grow your super faster, with less impact on your current income than if you were to make the same amount of contributions from your after-tax salary. Why? Because there’s a good chance you’ll save on the tax you pay as a result. Salary sacrifice is one of the most straightforward ways to charge up your super savings.
How salary sacrifice helps you save
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More savings in your super
First and foremost, you’ll be putting more money into your super every single month. And even if that’s a relatively small amount, it’s going to make a difference to your super balance over time.
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Less tax on your current income
These extra super contributions are taxed at a rate of 15%. Depending on how much you earn, you’ll save on the tax you’re paying. How much you’ll save depends on your marginal tax rate.
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Further tax savings
Once your super is invested, the returns you’ll be earning from it are also taxed at up to 15%.
5 essential super answers for public sector employees
Download our guide to getting the most from your defined benefit scheme.
What else you should know
If you decide to top-up your super, you need to be aware of the concessional contributions cap and how it applies to you. This is an annual limit on the amount you can add to your super from your pre-tax income, and includes your employer contributions. If you’re a member of a public sector scheme there may be specific rules around salary sacrifice. So it’s worth talking to an expert to check all the details and find out if it’s the right savings strategy for you and your super.
Planning a fulfilling retirement
Working with a financial planner to decide how much to contribute from your take home pay is a great way to take advantage of salary sacrifice. Speak to an Aware Super planner and prepare yourself and your finances for a positive retirement.
To get started, download our free Public Sector Superannuation guide or call us on 1800 620 305.
REFERENCES
1 Australian Retirement Vision Survey - Rice Warner, August 2015
2 The ASFA Retirement Standard benchmarks the annual budget needed by Australians to fund either a comfortable or modest standard of living in the post-work years.
This is general information and does not take into account your personal objectives, financial situation or needs. It is important to seek financial and taxation advice so as to determine what is appropriate for you, given your personal objectives, financial situation and needs.
