Super is an effective way to help Australians reach their retirement goals, although most are still unaware of how to maximise their contributions to ensure a comfortable retirement. Here are the things Australians in their last decade of working life should do, according to Mike Sikar of Delta Financial Group.
Utilising unused caps
Australians can now contribute any unused cap amounts from 2018 to the current financial year if an individual did not use the full $27,500 concessional contributions cap the previous year. This gives contributors bigger tax savings; the only requirement is that the individual's total super balance must have been less than $500,000 as of June 30, 2022. Utilising unused cap amounts can benefit individuals who need to make a large one-off contribution to reduce capital gains tax that may arise from the sale of an investment property.
Increasing annual contribution up to $330,000
Contributors need to understand the "bring-forward rule," which allows them to make extra non-concessional contributions without paying extra tax. If the rule has not been utilised in the past two fiscal years for those under the age of 75 as of July 1, 2022, they may be eligible to contribute up to $330,000 as long as their total super balance (TSB) was less than $1.48 million as of June 30, 2022. If their TSB was between $1.48 million and $1.59 million, they could contribute up to $220,000. It is important to review the contribution history from July 1, 2020, to make sure that any excess concessional contributions that have not been withdrawn do not count as non-concessional contributions and unintentionally trigger the bring-forward rule.
Profit of downsizing
Some may be eligible to make a downsizer contribution of up to $300,000 if they sell a home that they or their spouse owned for at least ten years and contribute the proceeds within 90 days of settlement. The minimum age to make a downsizer contribution has been lowered from 60 to 55. A downsizer contribution allows them to boost their super even if they are otherwise ineligible to contribute due to age or TSB. This means that individuals can still contribute even if they are aged 75 or more or have $1.7 million or more in super.
Utilising the work-test exemption
Non-concessional and salary-sacrifice contributions no longer require a work test. However, personal contributions for which a tax deduction is claimed must still meet the work test requirement of 40 hours of gainful employment within 30 days.
Superannuation is incredibly important for ensuring financial security in retirement, yet it is often underutilised. This is likely due to various factors, including a lack of education and awareness, personal circumstances, and the complexity associated with superannuation and retirement planning. It is crucial to ensure that individuals understand the benefits of superannuation and are provided with the information and support they need to make the most of their retirement savings. With the proper guidance, superannuation can be an invaluable tool for achieving a secure retirement.
Delta Financial Group helps Australians prepare for retirement through financial planning that maximises superannuation and other investment vehicles.
About Mike Sikar
Mike Sikar is the Founder and Principal Financial Adviser of Delta Financial Group, a rapidly-growing and innovative financial advisory firm that empowers Australians to make smart choices with their money. Sikar has over 25 years of wealth management experience in stockbroking and financial planning, founding Delta Financial Group in 2011.
His primary focus is investment advising and share-market education on an extensive range of investments both domestically and internationally. Sikar has a unique and broad skill set where he delivers informed, strategic, and holistic financial advice aligned with personal and financial goals.
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