Super Contribution Strategies Before Retirement
The final years before retirement can be particularly important for your superannuation.
Your income may be at or near its peak.
Your mortgage may be lower.
Children may be financially independent.
And for the first time in decades, you may have meaningful surplus cash flow.
That creates an important question:
How can you use the years before retirement to strengthen your super position?
Start Earlier Than the Final Year
One of the biggest mistakes is waiting until retirement is imminent.
Superannuation contribution limits mean you may not be able to move a large amount into super at once.
Planning five or ten years ahead can create more flexibility than attempting to restructure everything immediately before retirement.
Consider Concessional Contributions
Concessional contributions include employer contributions and certain personal deductible contributions.
Because limits and tax rules apply, it's important to understand how much has already gone into your super during the year before making additional contributions.
For some higher-income Australians, additional tax can also apply to concessional contributions.
The key isn't simply to "max out super".
It's to determine whether additional contributions fit your cash flow, tax position and long-term retirement strategy.
Consider Non-Concessional Contributions
Depending on eligibility, you may also be able to make contributions from money that has already been taxed.
These are generally called non-concessional contributions.
For someone approaching retirement with significant cash or investments outside super, these contributions may form part of a strategy for repositioning long-term retirement assets.
Again, contribution caps, total super balance tests and other rules apply.
Don't Forget Your Spouse
Retirement planning should generally consider the household rather than looking at each person's super independently.
One spouse may have accumulated significantly more super because of differences in income, employment history or time away from work.
Depending on the circumstances, contribution strategies may be available to improve the way retirement savings are distributed between spouses.
Think About What You Need Outside Super
Putting more into super isn't automatically better.
Before making large contributions, consider how much capital you need to retain outside super for:
emergencies
debt repayment
renovations
travel
helping family
investments
other pre-retirement goals.
Superannuation is only one part of your financial position.
Make the Last Working Years Count
For people approaching retirement in Subiaco and across Perth, the years immediately before retirement can provide valuable opportunities to strengthen their financial position.
The objective is not simply to contribute as much as possible.
It is to coordinate super contributions, tax, debt, investments and future spending so your assets are positioned appropriately for the retirement you want.
This article contains general information only. Contribution caps, eligibility requirements and taxation rules apply and can change. Seek advice based on your individual circumstances.