Topping Up Your Spouses Super: A Smart Retirement Strategy
When planning for retirement, many couples find their superannuation balances are quite different. This can happen for various reasons, such as differing incomes, career breaks, or time spent caring for children. If you’re looking for a smart way to improve your retirement outlook, consider topping up your spouse’s superannuation.
Why Consider Topping Up Your Spouses Super?
Topping up your spouse’s super can lead to several advantages:
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Greater Financial Independence: By boosting your spouse’s super, you help them become more financially secure in retirement, ensuring they have the funds they need to enjoy their golden years.
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Tax Benefits: Contributing to your spouse’s super can reduce your overall tax liability. This can be a clever way to manage your finances while still preparing for retirement.
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Maximising Tax-Free Pension Benefits: By increasing your spouse’s super balance, you could potentially enhance the tax-free portion of their pension income in retirement.
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Increasing Centrelink Age Pension Entitlements: More funds in your spouses super can positively impact their eligibility for the Centrelink Age Pension, making for a more comfortable retirement.
Ways to Boost Your Spouse’s Super
There are several methods to contribute to your spouse’s super:
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Personal Contributions: Your spouse can make personal contributions, which can be either concessional (tax-deductible) or non-concessional (after-tax).
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Salary Sacrifice: This allows your spouse to sacrifice part of their salary, which goes directly into their super fund, providing tax benefits.
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Spouse Contributions: You can contribute directly to your spouse’s super as an after-tax contribution. If your spouse earns less than a certain amount per year, you might qualify for a tax offset of up to $540.
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Super Contribution Splitting: You can split up to 85% of your concessional contributions with your spouse, providing a way to shift more retirement savings into the younger spouse’s super account. This can delay tax liabilities and potentially increase age pension eligibility.
Case Study: Paul and Lisa
Consider Paul and Lisa. Paul is nearing retirement while Lisa is still working. To help manage Paul’s super balance, which will be assessed for age pension eligibility, they decide to split his contributions into Lisa’s super over four years.
Paul contributes up to the concessional cap each year and transfers a portion of his contributions to Lisa’s super. By the time Paul retires, Lisa’s super has increased significantly, and Paul qualifies for an additional $5,000 per year in age pension benefits. This strategy not only boosts their retirement savings but also ensures they can enjoy a comfortable lifestyle.
How a Financial Adviser Can Help
Navigating superannuation can be complex, but a financial adviser can provide valuable assistance by:
- Assessing tax benefits and determining the best contribution strategy for your situation.
- Optimising retirement savings for both partners.
- Ensuring compliance with contribution caps and regulations.
At ActOn Wealth, we specialise in helping clients maximise their retirement benefits. Whether you’re just starting to think about retirement or you’re approaching it, our local retirement specialists can guide you through the process.
Conclusion
If you’ve ever thought retirement was too far away or that you wouldnt be able to save enough, we encourage you to reconsider. With the right superannuation strategies, such as topping up your spouse’s super, you can create a more secure financial future.
Contact ActOn Wealth today to explore tailored superannuation strategies designed to maximise your retirement benefits. Remember, a pension alone won’t provide the secure lifestyle you envision for your golden years—let us help you build a nest egg that meets your needs.
