The Power of Regular Voluntary Super Contributions
As the end of the financial year approaches, it’s a great time to consider boosting your super.
New research from Vanguard reveals that small, consistent contributions can significantly grow your retirement savings — and potentially reduce your tax bill.
For example, a 30-year-old who contributes just $1,000 annually to their super for 15 years could be nearly $80,000 better off by retirement at age 67. That’s the equivalent of contributing just under $20 per week. Even a single $1,000 contribution at age 30 could grow to more than $8,400 by retirement, thanks to compound interest.
“The key to boosting your retirement savings is the power of compound interest. So, the earlier you start, the better,” says Renae Smith, Chief of Personal Investor at Vanguard Australia.
The table below shows how annual contributions of $500 or $1,000 over 10 or 15 years — starting at age 30 — could impact your retirement balance…
How a Super Top-Up Before 30 June Could Reduce Your Tax Bill
Making a voluntary concessional super contribution may also reduce your tax bill. These contributions are typically taxed at a lower rate than most people’s marginal income tax rate, and you can often claim a deduction.
For instance, a 30-year-old earning $80,000 who contributes $1,000 to their super and claims a tax deduction would receive a $320 tax refund. This effectively reduces their take-home pay by $680. After 15% contributions tax, $850 is added to their super — meaning they’re $170 ahead overall…
Don’t Leave It Too Late
To make the most of these benefits this financial year, act early. Aim to make any extra contributions at least a week before 30 June to allow for processing.
Rick Maggi, Financial Advisor, Westmount Financial, Perth
Disclaimer
This document has been carefully prepared by Westmount Securities Pty Ltd (ABN 42 090 595 289, AFSL 225715) for general information purposes only. However, neither Westmount Securities Pty Ltd nor any of its affiliates guarantee the accuracy or completeness of any statements contained herein, including any forecasts. It is important to note that past performance is not a reliable indicator of future outcomes. This material does not consider the specific objectives, financial circumstances, or needs of any particular investor. Therefore, before making any investment decisions, investors should assess the relevance of this information to their individual situation and consult professional advice, taking into account their unique objectives, financial position, and needs.
