Financial Literacy for Everyone

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Superannuation

The main source of funds in retirement for most people is their superannuation. If you earn a salary, it’s the law for your employer to contribute a certain portion of your income to your super fund. This is called the superannuation guarantee and this figure is currently increasing from 9% to 12% of your salary by 2019.

Superannuation savings are money you can’t touch until you retire and for many of us, they will be our main income once we do finish work for the last time.

Aside from compulsory super savings, there are also lots of things you can do to increase the money you have in retirement, many of which also have tax benefits. Here are some of them:

  • If you are a low or middle income earner, you can contribute a certain amount of money to your super fund each year and the government will match this contribution. Your income will also be lowered by the amount you contribute to super, which means you will pay less tax on your income than if you had not made extra contributions to your super fund.
  • Another government incentive to help you grow your retirement savings is to salary sacrifice additional money to you super fund each time you are paid. Again, this will lower your pre-tax income, which will also mean you will pay less tax.
  • The spouse contribution tax offset is another way to help your family super nest egg grow. If your spouse earns less than $10,000 you can contribute up to $3,000 to his or her super fund each year and receive a tax offset of up to $540 a year.

If you’re some way from retiring, it’s easy to put super to the back of your mind. But even contributing small additional amounts now can help you have a more comfortable retirement.

If you have a number of different super funds, it’s also worth consolidating your accounts into one to lower the fees you pay and increase your money in retirement.