Ever since I went on maternity leave I?ve been thinking about the troublesome situation that is my super account balance. We all know (and are reminded often enough) that women will retire with a much lower account balance than our male counterparts. Sigh. With a new baby at home, thoughts on how to boost your superannuation balance are not front of mind. Here’s why it’s worth a second thought.
Time out from work whilst on maternity leave means that your employer isn?t making superannuation contributions to your fund on your behalf. Not only can account fees start to eat into your capital during this time, but the lack of regular investment into your fund means you are missing out on the power of compound growth which is the real kicker for your retirement balance.
Here are 5 ways you can boost your superannuation to make sure your super balance doesn?t suffer in the long run
- Make your own small contributions where you can
Anyone can make contributions to their superannuation, regardless of their circumstances if they are under 65 years of age. If you can find room in the family budget to make even the smallest regular contribution into your super account this will make a difference to your balance over the long term. Most funds will accept these kinds of contributions via BPAY, but you need a specific reference number so check with your individual super fund for details.
- Get your spouse to make contributions for you
A good way to keep your super ticking over whilst on leave is to have your spouse make after tax contributions to your account. They will also be able to claim a handy 18% tax offset of up to $540 for doing so. This one only applies though if you have an assessable income of less than $13,800 (but most full time SAHM?s will fall into this income category).
The tax offset for your spouse is progressively reduced dependent on your income. So if you earn the full $13,800 the offset is zero, whereas if you are earning $10,800 or less, the full $540 is deductible to them.
- Utilise the government?s co-contribution scheme
If you can find the money, this is a great way to get a tax free cash boost of up to $500 into your super account.
For every dollar that you contribute after-tax, the government will contribute 50 cents up to a maximum of $500. So if you make a $1,000 after-tax contribution to your super fund, the government will co-contribute another $500 on your behalf.
You need to be earning less than $35,454 a year in order to be eligible for the full co-contribution. You will be eligible for a partial co-contribution for income up to $50,454, but eligibility for the scheme ends there.
- Look to consolidate your super balances
Rolling all your superannuation balances into one account is what?s known as consolidating your super. This can help to reduce the total fees you pay as you are not paying fees across multiple accounts on smaller balances eating away your precious capital.
Whilst this isn?t a cash injection, reducing the outgoings from your account means you have more money invested over a longer period of time; leaving you more for retirement.
It?s important to consult with your superannuation fund/s or financial advisor before going ahead. For example you might be losing benefits attached to the account like existing life insurance cover and there could be difficulties in re-applying for this cover with another fund.
- Get to know your super
Most people don?t know how much super they actually have, let alone how it?s invested or what fees they are paying. And let?s face it ? it?s difficult! There are so many funds, so many investment options, and with so little free time – where do you even start?
A great place is this site. They provide super clear, easy to understand information on investment options, considerations for life and age stages and fund comparisons. They even have a nifty jargon buster.
You can traipse through the internet to individual fund?s sites and gather the information for yourself or buy a fund comparison report where you can compare up to 20 funds at a time. (I have no affiliation with this site ? I just think it?s an awesome starting point in getting to know your super).
So grab a hold of your super statements, and take a look at how much super you have and how it?s invested. And if you need some advice, speak with your super fund or a financial planner regarding what the best way for you to boost your superannuation balance might be.