Superannuation isn’t a “set-and-forget” investment. During your 30s and 40s, major life decisions such as starting a family or buying a home can arise, making it crucial to regularly review your superannuation strategy to ensure it aligns with your personal circumstances. While not every tip may apply to everyone in this age group, these strategies will help you consider important super-related decisions during this stage of life.
1. Reduce Your Tax Bill
As your salary grows, your 30s and 40s are ideal for considering a salary sacrifice arrangement with your employer. By contributing extra from your pre-tax salary to your super, you not only boost your retirement savings but also reduce your annual tax bill since concessional (before-tax) contributions are taxed at the lower rate of 15%.
2. Review Your Insurance Coverage
It’s essential to check the insurance cover provided by your super fund to ensure it suits your financial needs. If you have a large mortgage or a growing family, ensure you have sufficient coverage to protect your loved ones in case you die or become unable to work.
Paying for insurance like death, total and permanent disability (TPD), and income protection through your super can be a cost-effective way to secure cover, especially if your family budget is tight.
3. Update Your Benefit Nomination
Most super funds allow you to make a death benefit nomination to guide the trustee on how to distribute your super if you pass away. Ensure your nomination is binding and up-to-date, as it usually needs to be refreshed every three years. If it lapses, the trustee will decide who receives your benefit.
4. Boost Your Partner’s Super
During your 30s and 40s, your spouse might take time off work to care for family members. You can take advantage of tax benefits by contributing to their super or splitting your contributions with them.
5. Review Your Investment Options
As your personal circumstances and assets outside of super change, regularly reviewing how your super is invested is important. Even though you may still have many years before retirement, it’s wise to ensure your entire portfolio (including non-super investments) aligns with your risk tolerance and financial goals.
6. Set a Super Savings Goal
Think about how much you want in your super by the time you retire. Setting a clear savings goal increases your chances of achieving it. Once set, you can decide if additional voluntary contributions or changes to your investment strategy are necessary to meet your target.
7. Explore Personal Tax-Deductible and Carry-Forward Contributions
Making voluntary contributions to your super may entitle you to a tax deduction, which can reduce your income tax and enhance your retirement savings. Additionally, you or your partner could benefit from carry-forward contributions, allowing unused concessional contribution caps to be applied in future years.
8. Take Advantage of Government Contributions
If your income qualifies, you may be eligible for a government co-contribution of up to $500 into your super when you make personal contributions. Additionally, if you earn less than $37,000, you may receive up to $500 under the Low Income Superannuation Tax Offset (LISTO).
9. Consider a Self-Managed Super Fund (SMSF)
If you’re looking for more control over your retirement savings, establishing an SMSF might be worth considering. SMSFs offer tailored investment strategies and could be beneficial if you plan to purchase business premises. However, be aware that they come with strict regulations and oversight from the ATO.
10. Check Your Employer’s Super Guarantee (SG) Contributions
Ensure your employer is making SG contributions at least quarterly. You can monitor your super payments through your fund or via the ATO’s online services (myGov). Regular checks are especially important given the financial pressures some businesses face post-COVID, which could impact their ability to make super contributions.
Bonus Tip: Accessing Super Early
Though you’re in your 30s or 40s, severe financial hardship or compassionate grounds might allow early access to your super. However, strict eligibility conditions apply.
These strategies provide a foundation for securing your financial future while navigating the unique challenges of your 30s and 40s.
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Author Profile: Jeffrey Liu, JP, is the founder and principal adviser of Hippo Insurance (aka: Hippo Wealth), with a deep expertise in wealth protection. His extensive experience includes roles in the wealth management divisions of Westpac, ANZ, and a local multi-family office. As the host of “Riches Talk,” a podcast dedicated to cultivating personal and business growth, Jeffrey has established himself as a thought leader in developing life riches. His insights have been featured on SBS, The Australian, and Channel 7. Notably, he was a semi-finalist on Australia’s Got Talent in 2010. Learn more at http://www.hippoinsurance.com.au