September 12, 2010

Under 35? Five things you MUST DO NOW to boost your super!

By Kris Kitto

Chances are, if you are under age 35 the balance of your superannuation savings is probably the last thing on your mind.

This article will reveal five basic tips that you can use to immediately start giving your super a boost.

Number 1:  Change it up!

If you under 40, your retirement seems a long way off.  The major benefit of this is that you have time on your side – it is going to be around 20 years until you are going to be able to access your super, so take advantage of this by changing up to a higher growth investment option.

Nearly all industry, corporate and retail super fund enable you to have a choice of investment strategies.  They are typically labelled something like: conservative, moderate, growth, high growth or similar.

This means if you select a high growth option, you need to be prepared for your account balance to bounce around a lot more as its performance is tied to local and international investment markets.

Over a long period of time (and remember if you are young you have time on your side) the returns you will get from a higher-growth investment option will be significantly more than someone who has left their balance in the default, moderate, middle of the road investment option.  This means literally you will be tens of thousands of dollars better off when you retire.  It also means you will be a lot closer to having a sufficient super balance to be able to set up your own self managed super fund (SMSF).

Number 2: Consolidate

If you have more than one superannuation account, you need to consolidate or transfer those balances so they are all in one account.  By having all your super in one place, you are only paying one lot of administration fees and it becomes a lot easier to monitor the types of returns you are getting.

To consolidate your super is easy.  Contact the fund where your employer is currently paying your compulsory 9% super (or check their website) and obtain a balance transfer form (also known as a rollover form).  Complete the form and send it to the other super fund and they will transfer the balance within 28 days.

Number 3:  Track Down Lost Super

As of 30 June 2008 there was $12.9 billion dollars or lost superannuation assets in Australia.   This is made up of 6.4 million individual accounts.  Considering there currently population is only about 21.3 million there is a pretty good chance one of these lost accounts belongs to you.

Tracking down your lost super is easy.  Simply visit the ATO SuperSeeker website here.

To complete a SuperSeeker search you will need your tax file number, name and date of birth.  If there is a match, you will be provided with details of how to reclaim the lost super.  You can even  input the details of your current superannuation fund and the website can automatically produce the transfer forms you need to send away to reclaim that lost super.

Just because the SuperSeeker search doesn’t turn up anything, it doesn’t mean you don’t have lost super floating around somewhere.  If you have an old statement or can remember having your super paid to a particular fund while you were with a former employer – give them a call. They should be able to do a search over the phone.

Number 4: Money for Nothing

Using the Government Co-Contribution scheme is a fantastic way to give you super balance a huge boost.  If you earn less than $31,920 per annum, and put $1,000 of after tax money (a personal contribution) into your super fund the Government will automatically give you a matching $1,000.

That is effectively a 100% return on investment.

The entitlement phases out based on how much you earn so once your income hits $61,920 you will not be entitled to any co-contribution.  To work out your potential co-contribution entitlement, check the ATO website here.

Number 5: Get more in there!

The obvious way to boost your super balance is simply to put more in.  This can be done in one of two ways.  Firstly you can use personal or non-concessional contributions out of your own pocket which are after-tax dollars.  Secondly you can salary sacrifice and use pre-tax dollars.

Salary sacrifice is where you choose to receive more of your remuneration package as superannuation contributions rather than wages.  For example if you earned $85,000 per annum before tax and you wanted to salary sacrifice an additional $100 per week you after tax weekly pay would be reduced by $60.50,  however you would receive an additional $85 into your super fund.

The higher your before tax income, the more effective salary sacrifice is due to the larger difference between your marginal income tax rate and the flat rate of tax on superannuation contributions of 15%.

If you are saving for the deposit for an investment property, why not look at salary sacrifice to build your super balance and buy a positive cash flow property within your own SMSF?  With salary sacrifice you are using pre-tax dollars and are effectively getting a tax deduction for saving your deposit.  This is a lot better than actually paying extra tax on the interest earned on some savings account.

Salary sacrificing may also mean you become eligible for the government co-contribution.


If you elect to use only one or two of these methods you will quickly be able to see the difference in your super balance.  If you utilise all five methods you will reach your financial goals a lot sooner than you think.

Get out their and start doing it – you will get that deposit for your cash flow positive property a lot sooner than you think!

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