4 simple ways to save more super before you retire

14 December 2023

Whether retirement is a while off or right around the corner, it’s never too early or late to add more to your super. There are simple ways to maximise your balance while you’re still earning a regular income, so you’ll have more to fund the lifestyle you want in retirement.

During your working life, most people get a super contribution from their employer – known as the Superannuation Guarantee (SG). Generally, your employer must pay a minimum percentage of your earnings into your super account.

You can also choose to add more money to your super. Making extra contributions can help boost your super balance and  you could save on tax. Your super balance also stays invested so any investment returns you receive benefit from compounding too – this means any investment returns are generated on returns you’ve already earned.

Making extra voluntary contributions to your super account can have a big impact on your super balance when you come to retire. Explore 4 simple ways you can add more to your super¹ .

1. Add to your super before tax through salary sacrifice

Making a before-tax contribution (concessional contribution) to your super is also known as ‘salary sacrifice’. This is an arrangement where your employer pays a portion of your salary directly into your super account rather than into your bank account². These payments are made in addition to your employer’s SG payments. Salary sacrifice can only be set up for future salary, not past earnings.  

Some of the features of salary sacrifice include:

• Simple administration – it can be a helpful way to automate your regular contributions, and keeps the money separate to your bank account balance.
• You can stop the arrangement with your employer at any time.
• If you’re a middle-to-high income earner, making before-tax super contributions could also help you save on tax. This is because the tax you pay on your super (15% to 30%) is generally less than the tax you pay on your income from salary (up to 47%). However, before-tax contributions may not be tax-effective for low income earners.
• The tax rate is calculated at the time of payment, rather than needing to claim a deduction with the Australian Tax Office (ATO) when you lodge your tax return at tax time.

It’s important to note that the government limits the concessional contributions you can make to super. If you go over the limits, you may pay extra tax.

FIND OUT MORE: SALARY SACRIFICING

 

2. Add to your super after tax from your take-home pay

Another option is to contribute extra to your super¹ using the money you’ve already paid tax on – like your after-tax salary, a bonus, an inheritance or tax refund. This is known as a non-concessional contribution.

By adding to super after tax:

• You can choose to top up with one-off payments when it suits you.
• If you want to set up a regular after-tax contribution, you can also set up an ongoing direct debit or BPAY. The schedule and frequency are determined by you, rather than your salary pay cycle.
• After-tax contributions are managed by you, so you don’t need to coordinate with your employer. It also offers an option if your employer doesn’t offer salary sacrifice.
• The government sets limits on the amount of non-concessional contributions you can make to super. The non-concessional contributions cap is higher than the concessional contributions cap.

You can claim a tax deduction on after-tax contributions. Once again, if you’re a medium-to-high income earner, you may be able to save on tax – but you won’t be able to claim the deduction until tax time. You’ll need to notify your super fund and submit a Notice of intent to claim a tax deduction form before you lodge your tax return with the ATO. AustralianSuper members can use our online form through the member portal, which makes the process much smoother. Any after-tax contribution for which you claim a tax deduction will be included in your concessional contributions limit.

FIND OUT MORE: AFTER-TAX CONTRIBUTIONS

 

3. Get your partner to boost your super

If you’re married or in a de facto relationship, there are two ways your partner can add extra to your super. This could be particularly helpful if you’re taking a break from work or reducing your hours. Not only does your super get a boost, it can also be tax-effective for your partner.

Splitting

Your partner can choose to 'split' their before tax super contributions with you (concessional contributions). Contribution splitting or ‘super splitting’ means your partner can pay up to 85% of these contributions into your super account from theirs once a year.

This could include super contributions made by:

• your partner’s employer
• contributions your partner has arranged through salary sacrificing
• contributions your partner has claimed as a tax deduction

Spouse contributions

A ‘spouse contribution’ is when your partner adds extra to your super from their after-tax pay. Your partner may be eligible for a tax offset if they contribute up to $3,000 to your super as an after-tax payment (non-concessional contribution). If you earn less than $37,000 a year, they can claim an offset of $540. The offset amount gradually reduces until you earn $40,000 or more.

Again – it’s important to be mindful of the contribution limits that apply to before and after-tax contributions.

FIND OUT MORE: SPOUSE CONTRIBUTIONS

 

4. Get a government co-contribution if you’re a low-to-middle income earner

If your yearly before-tax income is less than $58,445, you may be eligible for an additional contribution from the Federal Government if you make after-tax contributions to your super³. 

The government will match 50 cents for every $1 you add to your super from your after-tax income (up to a maximum of $500 a year) if you: 

• make after-tax contributions to your super,
• earn less than $58,445 before tax in the 2023-4 financial year, and
• meet other eligibility criteria.

Government co-contribution rates

TOTAL INCOME4	YOUR CONTRIBUTION5	CO-CONTRIBUTION
$43,445 or less	$1,000	$500
$49,445	$600	$300
$55,445	$200	$100
$58,445 or more	Any amount	$0

 

FIND OUT MORE: GOVERNMENT CO-CONTRIBUTIONS 

Everyday spending and your super  

Keeping an eye on your spending as you approach retirement can help you understand your budget and allow you to put more into super. You can review your everyday spending, by using free budgeting tools, and checking your bank statements and any household bills you receive. To see the difference small, regular contributions could make to your final retirement income, use our Super Projection Calculator.

Consider consolidating your super and save on fees 

It’s also a good idea to check if you have more one super fund. Multiple super accounts often means paying multiple sets of fees which can chip away at your balance so it could be worth getting your super accounts all together⁶.

CONSOLIDATE YOUR SUPER

Head towards retirement with confidence and consider adding to your super today.

 

LOG IN AND MAKE A CONTRIBUTION TODAY

References:
1. Before adding to your super, consider your financial circumstances, contribution caps that may apply, and tax issues. We recommend you consider seeking financial advice.
2. Salary sacrifice may affect some government benefits and employee benefits. Consider getting financial advice before deciding if a salary sacrifice arrangement is right for you.
3. If you claim a tax deduction for after-tax contributions, your contributions will be classed as before-tax (concessional) contributions and no longer eligible for the government co-contribution.
4. Assessable income, plus reportable employer super contributions, plus reportable fringe benefits for the 2023/24 financial year.
5. To be eligible for a co-contribution, total super balance must be below $1.9 million on 30 June prior and you cannot have exceeded your non-concessional contributions cap in the relevant financial year.
6. Before making a decision to combine your super, consider any fees or charges that may apply, and the effect a transfer may have on benefits in your other fund such as insurance cover. We recommend you consider seeking financial advice.