How can I increase my retirement savings?
Once you've determined how much you should be saving to fund the lifestyle you want in retirement, you can build your retirement savings in a number of ways, including:
- making voluntary contributions to super, deducted, undeducted or spouse;
- making general investments.
Voluntary super contributions
Voluntary super contributions are regular savings that are directed to super investments in addition to the compulsory amount determined by the Government. You can make voluntary contributions to either your employer sponsored fund, or a personal super fund offered by many financial institutions.
Voluntary contributions can be made with pre-tax salary (salary sacrifice) or after tax monies. Salary sacrifice is when you contribute a portion of your gross salary into superannuation. This provides tax benefits as it reduces your taxable income. Also the amount contributed will be taxed at 15% instead of being taxed at your marginal tax rate.
A key advantage of voluntary super is that you can take advantage of the tax incentives, which the Government offered, for super investments. Whilst other investment earnings could be taxed as high as 48.5% (Medicare inclusive), earnings on super is taxed at a maximum of only 15%.
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