Build Your Super Savings Using These Hidden Perks…
Dreaming of retiring? So are we, and that’s why we want to help you achieve your goals by uncovering some perks within superannuation which you may not be aware of.
No matter your income bracket, no one needs to miss out on a comfortable retirement. Live the life in retirement that you have always dreamed of. Here are some of those hidden perks:
Let us tell you what we think is the best perk of all, and that’s compounding interest. The best thing is, everyone gets to benefit from this perk too! So, no matter your super account balance, income bracket or age it means you too get to reap the benefits of compounding interest.
Simply put, compounding means you earn interest on your previous interest. If you think of a snowball, the higher the hill the bigger the snowball will grow when it reaches the bottom of the hill. The earlier you start, the bigger your super account will grow and especially if you make extra contributions.
Go on, have a play with this online calculator and see how you could be benefitting from compounding interest.
Reduce Your Income Tax Bill
Many people could reduce the amount of income tax they pay now and improve their future retirement by making extra contributions to super, also known as voluntary contributions.
The two main ways to add to your super include:
1. Voluntary before-tax contributions through an agreement with your employer (salary sacrificing). Salary sacrificing can help transfer money that you would have lost in tax into your super savings (use our salary sacrifice calculator to see how much tax you could be saving); and,
2. Voluntary after-tax contributions. You can make after-tax contributions in lump sums from your after-tax income. These lump sum personal contributions are not taxed as you’ve already paid the tax on the income. However, it’s important to be aware of the restrictions and conditions around tax deductions for after-tax contributions. Some of these restrictions include:
- If the fund no longer holds the contribution;
- On a payment to your super that’s a rollover from another fund; or,
- On First Home Super Saver Scheme (FHSSS) amounts released to you then recontributed to your super fund.
Advantages of Investing Consistently
‘Dollar Cost Averaging’ is a no-stress way to overcome the unpredictability of investment markets.
Ultimately, Dollar Cost Averaging means investing consistently in your super; that is, instead of investing a lump sum all in one go, you invest smaller fixed amounts on a regular basis for a period of time. So, as unit prices move up and down you buy more units when the unit prices are low and fewer units when they are high. The idea is that you are taking away the risks associated with trying to time the market which is tempting to try to achieve when investing a lump sum. You can maximise the effect of averaging by also making additional personal contributions on a regular basis.
Free Money from the Government
Here are two Government initiatives designed to assist low-income earners by providing up to $500 additional super per year.
Do you earn less than $37,000 p.a.?
- You may be eligible to receive a $500 government payment, usually paid directly into your super fund, known as the low-income super tax offset (LISTO). Check the ATO website to see if you are eligible.
Do you earn less than $39,837 p.a.?
- If you make personal (after-tax) contributions to your super fund of at least $1,000, the government may also make a contribution (called a co-contribution) up to a maximum amount of $500.
- If you earn more than $39,837 but less than $54,837, you may still be eligible to receive a government payment. To learn more about this government initiative, click here to learn more via the ATO website.
You and Your Partner Can Benefit
If you work part-time or not working right now, often due to family commitments, your spouse or partner could add a bit extra to your super. On top of boosting your balance, your spouse could get a tax offset that could benefit both of you. In fact, if you earn less than $37,000 a year, your spouse can add as much as $3,000 into your super and get an 18% tax offset.
Super isn’t always straightforward, but this doesn’t need to be the case. At REI Super we’re dedicated to providing every single person with the personalised service they deserve. Visit REI Super’s website to learn more about the benefits of joining your dedicated industry super fund.
Disclaimer: In presenting this information REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Members should obtain and read the Product Disclosure Statement for REI Super before making any decisions and consider talking to a financial adviser before making an investment decision. Past performance is no indication of future performance.
This information has been prepared and published by REI Superannuation Fund Pty Ltd ABN 68 056 044 770 RSE L0000314 AFSL 240569. REI Super ABN 76 641 658 449 and RSE R1000412 MySuper unique identifier 76641658449129 for the general information of members of REI Super.
Although REI Super makes every reasonable effort to maintain current and accurate information, you should be aware that there is still the possibility of inadvertent errors and technical inaccuracies. The REI Super Helpline and the REI Super website are provided by Mercer Outsourcing (Australia) Pty Ltd ABN 83 068 908 912 and Mercer Financial Advice (Australia) Pty Ltd (MFA) ABN 76 153 168 293, Australian Financial Services Licence (AFSL) #411766. September 2020