As the new year is now upon us, there’s no better time to plan for an uptick in your investments.
Financial market performance in the past 2 years has been uncertain due to the pandemic. However, we have seen incredibly positive movements meaning it may be worth reviewing your superannuation strategies to ensure they are still aligned with and taking advantage of current market movements.
It’s crucial to plan ahead when it comes to financial investments.
If you want to set your superannuation fund in the direction towards seeing growth amid positive market sentiments, you may want to start taking advantage of the opportunities superannuation planning yields.
Here are 4 strategies that may help you grow your superannuation in the near future:
Strategy #1: Salary Sacrifice
One superannuation strategy you may want to take advantage of in 2022 is salary sacrificing.
This is a planning approach used by employed individuals to boost retirement savings and save on tax at the same time.
This strategy involves selecting an amount of your salary to put into your super fund before aIn the context of superannuations, it entails foregoing taxable salary and contributing the saved amount in the form of a concessional contribution (pre-tax super contribution).
This strategy is limited in terms of adherence to the concessional contribution limit of $27,500.
Strategy #2: Catch-up Super Contributions:
With this strategy, you are able to exceed the annual concessional contribution cap if you haven’t used the full concessional contributions cap in an earlier financial year (from 1 July 2018 only).
This strategy may be worthwhile looking into if you are someone who may have had a year where under certain circumstances you had interrupted income. You may have taken time off (or are planning to take time off) for work to study or care for children.
Alternatively, maybe you are making more money now than you have in previous years so you can afford to contribute more to your super fund now.
Whatever the case may be, it can be beneficial to look into if you are eligible to make a catch-up contribution to your super fund.
Strategy #3: Tax-Deductible Contributions
Whether you’re employed, self-employed, or in some instances even unemployed or retired, you may be able to take advantage of claiming a tax deduction on certain after-tax super contributions (non-concessional) you’ve made during the financial year.
It’s important to note that this doesn’t include the compulsory super guarantee contributions that your employer must pay, nor does it include salary sacrifice contributions.
Sharing this information so early in the new year is valuable. If you are someone who hasn’t made a non-concessional super contribution yet, you still have time before the EOFY (30th June 2022).
There are multiple ways you may be able to make an after-tax super contribution, such as using money from your:
- regular bank account,
- an inheritance,
- or from the proceeds of the sale of an asset.
Utilising this strategy of contributing to your super and claiming it as a tax deduction may be beneficial often if you are someone who receives some extra income that you’d otherwise pay tax on at your personal income tax rates (which is often higher).
If you’re claiming a tax deduction for an after-tax super contribution, the contribution will count toward your concessional contributions cap ($27,500 per year).
The amount you choose to contribute is up to you but remember you can’t contribute more than $27,500 per year under the concessional contributions cap unless you’re eligible to make catch-up concessional contributions as well.
Strategy #4: Spouse Super Contributions
For married couples looking to take advantage of positive market sentiments for the 2021-2022 financial year, another key strategy that can be used is Spouse Super Contributions.
If your partner earns less than $37,000 for the financial year, you can make a superannuation contribution minimum of $3,000 in lieu of theirs and claim a tax rebate of up to $540.
This may be beneficial for many Australians as the pandemic has interrupted so many industries and job consistency. Alternatively, if you have taken time off work to look after children or your family, this strategy can be financially beneficial and can increase both partners’ super funds for retirement.
However, it’s important to understand that contributions for which the spouse rebate is claimed are not eligible for government co-contribution payments.
Need Superannuation Advice from a Financial Planner in Brisbane?
When it comes to your superannuation it’s important to plan ahead using the right strategies, so you can make the most out of the strategies.
With this guide, you can ensure that you will be able to see significant returns on your efforts and set your superannuation up for success in the long-term.
HH Wealth is rated as the best financial advisor in Brisbane that investors can trust when maximising their superannuations.