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Six ways to boost your super balance
It can take an entire lifetime to build up enough savings to retire comfortably.
Yet thanks to the economic impacts of COVID-19, 1.41 million Australians made the decision to dip into their superannuation to prop up their finances during the downturn.
If your retirement savings has been set back because you had to take funds from it, or if your super has taken a nosedive thanks to the shaky share market, chances are you’re more concerned than you’ve ever been about your nest egg.
For those who are in a tight spot with their super, RateCity has put together six ways to realistically grow your retirement funds.
Before making any decisions relating to your super, consider speaking to a financial advisor who can provide financial advice tailored to your personal situation.
1. Get to know your super
You can’t grow your super if you don’t understand it. It’s worthwhile to be across:
- how much super you have in total.
- how many super accounts you hold.
- your super’s growth rate.
- how your super is invested (balanced or growth, etc).
- the fees charged.
- how much your employer is contributing and how regularly.
Understanding your super could help you make better decisions about how you manage your wealth.
2. Compare your super options
Just like how you would do your research when you shop for a new laptop, it makes sense to make sure you’re getting the best bang for your buck with super. While it’s not advised to switch to a lower risk option, it doesn’t hurt to compare what other super funds are out there. The main things you could compare include fees, returns, includes insurance, premiums and whether it comes with financial planning services. To weigh up your super options, consider using RateCity’s comparison table.
3. Consolidate your super
Remember that every super account you hold charges fees and, if you have insurance attached, premiums. These charges can significantly reduce your super balance over time.
By keeping your super in one account, you may be charged less in fees and premiums, so it’s likely you’ll have more funds left over when you retire. Check with your super provider how you should consolidate, but usually you can do it online or over the phone. Make sure you’re aware of any included insurance in your super, as these could be stopped when you close a super account.
4. Make extra contributions
For the serious long-term thinkers, it could be a good move to contribute additional payments to your super. You can do this regularly through salary sacrificing, which is when your employer tops up your super from your pre-tax income. These contributions are taxed at a 15 per cent rate when it reaches your super fund.
You can also load up your nest egg by making after-tax contributions. You may even be able to save on tax by claiming a tax deduction for any after-tax contributions. Note that there are caps to the extra contributions you can make and if you exceed the cap, you may need to fork out extra tax. It’s best to consult your tax accountant or financial adviser for advice about your financial situation.
5. Assess your insurance cover
Many super members usually receive insurance automatically without even realising it. This means they might not know what cover they’re getting, the level of cover they have and how much it’s costing them in ongoing premiums. To find out the details and check if it’s the right cover for you, consider going through your product disclosure statement (PDS), which can be found on your super provider’s website.
6. Chip in to your spouse’s nest egg
It’s not just all about you. If your spouse works part-time, is on a lower income than you or is taking a career break (to have a baby, for example), chances are they’re missing out on a big chunk of super.
You can help boost their retirement savings by making contributions on their behalf. If you’ve recently made contributions to your own super, it’s possible to transfer a portion of these to your spouse’s super account. By making a spouse contribution, you may benefit from a tax offset.
However, not every super fund offers this option and it may charge you a fee for doing this. Check with your super provider to find out more details.
Disclaimer
This article is over two years old, last updated on May 30, 2020. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent superannuation articles.
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Product database updated 07 Dec, 2024
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Promoted superannuation
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22.4%
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Product data updated on 7 Dec 2024