How to Grow Your Superannuation

Superannuation, or simply “super,” isn’t just a savings plan—it’s your key to secure and fulfilling retirement plans. At LIFE Financial Planners in Perth, we recognise the significance of making informed decisions about your super, and we’re here to guide you every step of the way.

Super Contributions

Super contributions play a significant role in building your retirement savings. There are various types of contributions you can make to your super fund, including employer contributions, voluntary contributions, government co-contributions, spouse contributions, and downsizer contributions: 

• 1. Employer Contributions: Your employer is required to contribute a percentage of your earnings into your super account. This compulsory contribution, known as the super guarantee, must be at least 11% (increasing to 11.5% on July 1st 2024) of your ordinary time earnings.
• 2. Additional Voluntary Contributions: Making extra contributions to your super can significantly accelerate its growth. You can contribute additional funds through salary sacrifice arrangements or by making after-tax contributions.
• 3. Government Co-contributions: Eligible individuals making after-tax contributions to their super may qualify for government co-contributions. The government matches a portion of your contributions, providing a valuable boost to your retirement savings.
• 4. Spouse Contributions: If your spouse earns a low income or is not working, you may be eligible to contribute to their super account and claim a tax offset. This can be a tax-effective way to bolster their retirement savings.
• 5. Downsizer Contributions: If you’re aged 65 or older and have owned your home for more than ten years, you may be able to contribute up to $300,000 from the sale of your home into your super. This one-time contribution can enhance your retirement nest egg.

Investment Strategies

Investment strategies involve determining how you allocate your superannuation funds across different asset classes, such as stocks, bonds, property, and cash. The primary goal of an investment strategy is to achieve the optimal balance between risk and return based on your financial goals, risk tolerance, and investment time horizon: 

• 1. Asset Allocation: Diversifying your super investments across different asset classes, such as stocks, bonds, and property, can help manage risk and optimise returns over the long term.
  
• 2. Risk Management: Assessing your risk tolerance and investment time horizon is essential for selecting appropriate investment options within your super fund. If you’re a conservative investor, you may prefer lower-risk options, while oppositely, if you’re an aggressive investor, you may opt for higher-risk, higher-reward investments.
• 3. Regular Review: Monitoring and periodically reviewing your super investment portfolio is essential for ensuring it remains aligned with your financial goals and risk tolerance. Adjustments may be necessary based on changing market conditions or personal circumstances. Regular reviews with a financial planner can provide valuable insights and adjustments to keep your investments on track.

Determining Your Retirement Needs 

• 1. Retirement Lifestyle: Consider the lifestyle you envision for your retirement years, including housing, travel, healthcare, and leisure activities. Estimating your expected expenses can help determine how much super you’ll need to support your desired lifestyle.
• 2. Superannuation Gap: Calculate the gap between your projected retirement expenses and your expected super balance. Identifying any shortfall early allows you to implement strategies to bridge the gap, such as increasing contributions or adjusting investment strategies.
• 3. Age Pension Considerations: Factor in any potential Age Pension entitlements when estimating your retirement income. Understanding your eligibility for government benefits can impact your overall retirement planning strategy.

At LIFE Financial Planners, we’re dedicated to helping you take control of your financial future and utilise the full potential of your superannuation benefits. Don’t leave your retirement savings to chance—let us empower you to achieve a secure and prosperous retirement with our expert superannuation advice. Reach out to Marijana or Mei today at (08) 9322 1882 to schedule a consultation at our West Perth office.