Super made simple: easy steps to boost your life savings

Estimated reading time
 8 min

In this article

• Set yourself up for the retirement you want
• How to supersize your super
• Sole trader? Organise your super with our simple steps

Whether you work full-time, casually, on contract or for yourself, your superannuation can be one of the most powerful ways to set yourself up for a stress-free retirement. But while this automatic savings tool is good news for your future, it can also have big benefits for you today.

In this easy guide to super-powering your life savings, we explain how understanding and investing in your super can have tax benefits and attract high interest as a financial asset. Let’s start with the basics of choosing and changing, then move on to the steps you can take to boost your super - whatever your current life and working conditions are.

Choosing a super fund

Each super fund comes with its own fees, platforms and investment ethics, and it pays to do a little research to see which aligns best with your interests (excuse the pun). The good news? While your fund account moves with you from job to job, you’re not married to it for life - if you find an alternative with better conditions, you can roll your super from your existing fund to another. Most people can change to any fund they choose at any time they want to.¹

What makes a super fund right for you?

There is no one-size-fits-all. The ATO has a handy super comparison tool that enables you to compare funds easily based on the information you provide. It enables you to look at:

• Annual fees and where they go
• Clear and understandable investment strategies
• Options around support and services
• Insurance guarantees
• Investment performance over the past 3, 5 and 7 years in comparison to other funds

Give a little, gain a lot

Australian employers now pay 10 per cent of your salary directly into your super account in addition to your wages. But you can top that with these simple steps to supersize your super:

Always consider your individual objectives and circumstances to work out what is right for you! Before making any changes, consider the terms and conditions, eligibility criteria and fees or charges and seek independent advice.

• Consolidate your super into one fund. Over the course of your working life, it’s possible that you have accumulated little amounts in more than one super account. Because of how compound interest works, this might mean you’re not making the most of your overall super balance. You can find past accounts using your MyGov account and roll them into your preferred fund to maximise your interest earning.
• Consider contributing extra. There are tax incentives for contributing extra to your super via salary sacrifice schemes or personal contributions. A good way to do this is to have your employer pay a bit more of your salary or wages into your super fund each month instead of to you. This is classified as employer-paid super and attracts a lower tax than your marginal tax rate. Remember to seek independent tax advice and do what works for you!²
• Timing, timing, timing! A contribution is counted when the payment is received by your fund, not when the payment is sent. So, be sure your fund receives all your contributions by EOFY to claim on any concessional contributions. If you’ve got a salary sacrifice agreement, talk to your employer, and provide clear instructions around timing.

Here’s to you, sole traders

You don’t have to work 9 to 5 to max your super. Freelancers and gig workers can also benefit from ensuring their funds are up to date and as full as possible. If you don’t have an employer making regular contributions, there’s greater onus on you to organise your own payments, but it’s easy to feel empowered by that with these simple steps:

• If you’re a sole trader, check that your super fund has your ABN to ensure you can claim co-contributions where eligible, get taxed fairly, and make personal contributions.
• Make personal super contributions from your after-tax income, which may involve contributing directly from your bank account to your super fund. Hot tip? Set up automatic contributions from your nominated bank account to your superannuation account so that you don’t need to think about it.
• Depending on your earnings, you may be eligible for a government co-contribution to your super account. The government co-contribution scheme operates on a tiered system, where the government pays up to 50 cents for every after-tax dollar you personally contribute to your super account, dependent on how much you earned.

Hot tip for couples or stay-at-home parents

Spouses (de facto or married) may also be able to claim a tax offset if they make an eligible contribution on behalf of their spouse who is earning no income or a low income. Try using the ATO Super Co-Contributions Calculator to estimate your eligibility and entitlements.

Best to leave your super untouched

There are very limited reasons for accessing your superannuation early – such as terminal illness or severe financial hardship. This is because your superannuation needs time to accumulate value via compound interest. When you withdraw ahead of retirement, you’re not only reducing your balance now, but significantly reducing its potential value for the future. Here are some reasons to leave your super untouched:

• Typically, superannuation comes with insurance in many forms – such as life, total and permanent disablement, or temporary salary continuance insurance. Withdrawing a lump sum can affect these conditions such as your cover, so check with your fund first.
• If your withdrawal is approximately $20,000, this can have an enormous impact on your retirement fund, especially if you're in your twenties. By the time you reach retirement age, that withdrawal could result in a loss of over $100,000 to your retirement savings. If you withdraw $20,000 when you're 40, it could result in a loss of over $55,000 to your super value*

If you’ve already withdrawn from your superannuation, don’t despair! Take the advice provided for employees, sole traders and freelancers, or stay-at-home parents to give it a leg up. If you feel like you need a helping hand, speak to a financial advisor who can guide you or help make provisions for super contributions in your budget.