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How to boost your super in the lead-up to retirement


You’re not alone. New research has found up to three in five working Australians are worried they don’t have enough saved to retire and more than one in five don’t expect to achieve their desired standard of living in retirement – particularly with growing cost-of-living pressures. But before you decide it’s all too hard and resign yourself to never retiring, there are still opportunities to pump some extra cash into your super over the next few years. It’s never too late to make feathering your retirement nest egg a priority.

Do a stocktake and make a plan

The first step is to stop worrying and work out where you’re at. Although many Aussies believe they don’t have enough saved for retirement, almost half say they aren’t sure how much they will actually have, or need at retirement. So, the first step is to find out your likely super balance when you retire and how much you think you’ll need. Fortunately, many super funds provide a balance estimate on your annual member statement. If not, check to see if your fund has a retirement income calculator, or contact them for a retirement balance quote.

Once you have estimated how much you are likely to have at retirement, compare this with how much you will need to fund your planned retirement activities and lifestyle.

With a solid idea of where you will be at retirement, you can create an action plan for the next few years if your super account balance isn’t where you want it to be. In your pre-retirement years, your expenses are usually a bit lower because (hopefully) the mortgage is paid off and the kids have left home. That should leave you with some spare income to give your super account a shot in the arm using different contribution options.

Easy ways to boost your super balance before retirement

1. Consider carry-forward contributions

  • If you feel like you’ve missed the boat when it comes your super, there’s a potential tax-deductible contribution many people overlook.
  • Making a carry-forward super contribution is an easy way to boost your super nest egg if you have a few dollars spare. These contributions can be great if your employer’s Super Guarantee (SG) contributions don’t reach the annual concessional cap, or if you don’t have a salary-sacrifice arrangement with your employer.
  • Super members with a Total Superannuation Balance under $500,000 are free to roll forward any of their unused concessional contribution cap amounts on a rolling basis for five years. This means if you haven’t used the full amount of your annual concessional cap ($27,500 in 2022–23), you can still take advantage of it up to five years later. After that your cap amount expires.
  • To see how this works in real life, imagine your concessional contributions (including your employer’s SG and salary sacrifice contributions) totalled $20,000 in 2021–22. This leaves you with a carry-forward cap amount for that year of $7,500.
  • In 2022–23, this amount can be added to your normal annual $27,500 concessional cap, giving you a potential concessional contribution cap for the year of $34,000 ($27,500 + $7,500).
  • The easiest way to see if you have any unused carry-forward contribution amounts available is to check your contribution amounts with the ATO using your myGov account.

2. Make voluntary after-tax contributions

  • Although you’re free to make voluntary non-concessional (after-tax) contributions to your super at any time, it makes even more sense when retirement is on the horizon.
  • These after-tax contributions can be on a regular or one-off basis to suit your personal circumstances and for most people, they can total up to $110,000 a year (in 2022–23). Your personal limit may be lower if you already have a large amount in your super account.
  • There’s an even better opportunity to give your super account a shot in the arm if you decide to make some after-tax contributions.
  • You can bring-forward up to two future years of your after-tax contribution cap without being penalised. These contributions can be made either all at once, or as several large contributions.
  • Once you meet all the eligibility criteria, the bring-forward rules allow you to make non-concessional contributions totalling up to three times the annual general cap in a single year (3 x $110,000 = $330,000 in 2022–23).
  • From 1 July 2022, if you’re under age 75 at any time in a financial year, you could be eligible to make bring-forward contributions. And you don’t need to worry about meeting any work test.

Need to know:

Bring-forward arrangements are different from carry-forward contributions as they are non-concessional (after-tax) contributions. Carry-forward contributions on the other hand utilise any of your previously unused concessional (before-tax) contributions cap amounts on a rolling five-year basis (see point above).

3. Think about a transition-to-retirement (TTR) pension

If you’re getting close to retirement and want to ease into retirement but still make regular super contributions, another option to consider is starting a transition-to-retirement income stream (or pension) from your super.

Once you reach your preservation age (55 to age 60, depending on when you were born), you can start a TTR income stream that enables you to withdraw income from your super account while you continue working. You can even continue working full time.

If you combine this with a salary-sacrifice strategy, you can continue growing your super account and potentially save some tax at the same time. A TTR income stream allows you to:
  • Ease into retirement by reducing your working hours without reducing your income
  • Continue growing your super account by making salary-sacrifice or voluntary contributions
  • Receive tax-free income payments from your super account if you’re aged 60 and over (or concessionally taxed if you’re under age 60).
Generally, a TTR is best suited to super fund members who have reached their preservation age, are still working full time and want to continue growing their super account for the next few years.

Need to know:

Whether you choose to make salary-sacrifice or voluntary carry-forward contributions into your super account after starting a TTR, your contributions will still be taxed at the normal concessional rate of 15% and the annual contribution cap of $27,500 (in 2022–23) still applies. If your marginal tax rate is higher than 15%, making these types of contributions can be very tax-effective, as the 15% tax rate is less than you would pay outside the super system.

4. Make a downsizer contribution

  • If selling your current home is part of your retirement plan, another good option to consider is using some of the proceeds to make a downsizer contribution into your super account.
  • Couples can contribute up to $300,000 each into their super account, for a total contribution of up to $600,000.
  • Downsizer contributions are exempt from many of the normal annual contribution caps and rules, so they can be a great way to give your super a meaningful last-minute boost.
  • They are also tax effective. When you move into retirement and start drawing a super pension, your investment earnings are tax free. If you invested the sale proceeds your home outside the super system, you would be up for tax on your investment earnings.
  • Originally downsizer contributions were only available once you hit age 65, but from 1 January 2023 if you are aged 55 or older you are free to make a downsizer contribution provided you meet all the eligibility criteria.
5. Aim to get a co-contribution payment
  • When it comes to simple ways to boost your pre-retirement savings, they don’t come much easier than taking advantage of the government’s co-contribution scheme.
  • If you’re eligible, all you need to do is tip a few extra dollars into your super fund and wait for the government’s extra contribution to drop into your super account.
  • The extra super top-up from the government is an incentive to encourage low and middle-income earners to boost their retirement savings with any extra cash they have available each year.
  • To pique your interest, the government matches 50 cents for every $1 you add to your super from your after-tax income (up to a maximum of $500 a year).
  • There are a number of eligibility rules, but the key one is you need to earn $42,016 or less a year before tax in 2022–23 and you need to make the contributions from your after-tax income. If you earn more than $42,016, the matching rate paid by the government gradually reduces until it phases out completely when your income hits $57,016.
  • The actual amount you receive depends on your income and the size of your personal super contribution, with the minimum amount being $20. You don’t have to do anything either, as the ATO pays your co-contribution directly into your super account.

Other tips for boosting your super

While making some extra contributions is an easy way to boost your super balance, there’s other things you can do as well:
  1. Watch your spending as you approach your retirement. Simply cutting a few discretionary items out of your budget can free up more money to add to your nest egg. It will also give you head start when it comes to understanding your post-work budget.
  2. Consolidate your accounts and save on fees. If you have multiple super accounts, check whether it makes sense to pull all your super together into one fund. But watch whether consolidation could cost you money (fees and tax), or see you miss out on valuable insurance cover.
  3. Top up your spouse’s super. If your spouse is working part-time or earning a low income, consider boosting their super account as well. You may even be able to pocket a tax offset into the bargain.
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