7 ways to grow your superannuation balance
When it comes to growing your superannuation, there’s a range of ways to go about it. Anything you add to your super is called a contribution. Here, I’ll take you through 7 of the most common contribution types and explain how to make the most of them.
1. Employer contributions
If you have a job, you’ll be receiving what’s called an employer contribution. Your employer is required to put a portion of your salary into superannuation on your behalf – this should happen every year you’re employed.
2. Salary sacrifice contributions
In addition to employer contributions, you also have the option to make additional salary sacrifices which direct an extra portion of your salary into superannuation. For example you could choose to sacrifice an extra $50 a week from your pay and while it doesn’t seem like much, it’s a great way to grow your super balance over time.
3. Personal concessional contributions
If taking an extra amount from your pay each week isn’t an option, but contributing a lump sum each year is (from a work bonus or even a lotto win!) then a personal concessional contribution could be for you. This approach allows you to add lump sums to your super while claiming a tax deduction on that amount. There are some limits when making this type of contribution, but it’s a good way to add to your super’s bottom line, while also saving on tax.
4. Non-concessional contributions
This type of contribution generates less tax savings, but it’s still a good way to boost your super. Non-concessional contributions are usually larger amounts of money (say $20,000 or $100,000 - from an inheritance or property sale for example) that you might decide to add to your super account. This may be a one-time contribution, or something you do every year (though it’s worth keeping in mind annual non-concessional contributions are subject to limits).
5. The co-contribution
If you’re eligible, the co-contribution is a great option – you put a bit of extra money into super, and the Government will match that amount, up to 50%, for free. This type of contribution only applies to certain income thresholds and does have its limitations, but it’s great if you’re working part-time while you study for example, or at the other end of your working life when you might be working less hours as you transition to retirement.
6. Spouse contribution
The spouse contribution is exactly what it sounds like - where you put some extra money into your spouse’s super, or vice versa. This can work well in a variety of scenarios – if you and your partner fall under different tax brackets, or to keep your partner’s super balance healthy while they might be caring for children. It’s well worth looking into if you’re in one of these situations.
7. Downsizer contribution
As you approach retirement, you may be able to take advantage of the downsizer contribution. As you approach retirement you may have a big house you no longer need, or want to reduce aspects of your lifestyle that were important while raising a family, but less so now. Choosing to downsize can often leave you with extra funds so there’s no better time to add to your retirement nest egg.
While there are limits and conditions associated with some of these contribution options, it’s good to be aware of the range of ways you can grow your superannuation, whether you’re at the start of your super journey, or close to the end.
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