6 ways to increase your superannuation account
Planning for retirement can sometimes seem premature; it can be easy to put off that planning and get caught up in some short-term financial concerns.
But a retirement can last decades and most people need a healthy nest egg put aside to live comfortably. It might seem a little daunting but with good financial planning, saving for retirement can become second nature.
Superannuation is one of the safest ways to build a transition into retirement. The more actively involved you are, the better your super will be. It’s never too early to start. In fact, the earlier you start the better.
Here are some ways to focus on building your superannuation balance today.
- Make your own contributions
If you’re earning a good salary and find yourself with a bit of disposable income, consider sacrificing some of your salary to your super. These are additional pre-tax contributions to your super and will boost it while lowering your taxable income.
There is an annual limit to the amount you can contribute through salary sacrificing. From 1 July 2017, the annual limit is decreased to $25,000 for every age group.
- See if the government will lend a helping hand
If you’re a low-income earner, the government may be able to help you out. Under the Federal Government’s Co-contribution scheme, many low-to-middle income earners who make voluntary after-tax super contributions, may be eligible to receive a subsequent contribution from the government of up to $500 per year.
- Help out your spouse
If you’re married and starting a family, there is a chance one of you may choose to become a stay-at-home parent.
The government encourages spousal contributions to the super of primary care givers by offering tax offset incentives for people who contribute to the super of a partner who earns less than $40,000 a year (from 1 July 2017). These super contributions will reduce your tax while helping out your partner.
- Bring all your super together
Over the course of a career, it’s easy to accumulate several super accounts and lose funds along the way. Consolidating your super combines all of your active funds into one, making it far easier to manage your super and avoid paying numerous sets of fees.
- Make the most of your assets
When it comes to retirement, you don’t want to be entirely reliant on your super or the age pension. Accumulating assets will give you a back up. Choose assets that will grow over time, such as shares and property, to ensure that your capital will increase in value and keep pace with inflation.
Try to diversify your assets, so if you lose on one, your entire nest egg won’t be damaged. At the very least, assets will provide you with a tangible form of wealth.
- Choose wise investment strategies
Making wise investments earlier in life can provide a great source of income for your retirement. Choose quality long-term investments over speculative investments that are more likely to lose value quickly. The basic investment classes include:
- Cash - for low risk, low return saving.
- Fixed interest - for relatively low risk and moderate returns.
- Property - for moderate to high risk and returns.
- Australian and foreign shares - high risk investments with potentially high returns.