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How to break the super glass ceiling

How to break the super glass ceiling

Different work patterns and incomes mean that Australians don’t end up with the same super balances when they retire.

There are many reasons why your superannuation balance might be different from family members, friends or colleagues.

A delay in starting work or a career break can affect how much you have available to you in retirement.

This might be a result of illness or because you are taking care of family members, including children, your partner, or parents.

It could be the result of being unable to find employment for a period of time, or it could be to travel.

No matter what the reason, there are certain things you can do that might help to lessen the impact on your super balance, so you can achieve the lifestyle you want in retirement.

Things that could make a difference

  • Make voluntary contributions to your super beyond the Superannuation Guarantee (SG)
  • Check your super balance and how it is invested
  • Investigate government co-contributions and spouse contributions
  • Find any lost super
  • Consolidate your super accounts

Voluntary contributions

You can choose to make voluntary contributions to your super from your before-tax salary prior to taking a career break and/or after your return.

Either way, a salary sacrifice arrangement can help to top up the balance of your super account.

It’s a concessional contribution, and there are caps set by the Federal Government that limit how much you can add, so check the Australian Taxation Office website for the most up-to-date information.

You might also be able to make after-tax contributions while you are earning, depending on your circumstances. Again the ATO has information about how much you can contribute and what tax implications there might be.

Be financially aware

Retiring and superannuation can seem a long way off if you are young, and other life milestones such as having a family or buying a house can sometimes take your focus from making financial plans for your future.

But the earlier you can start taking control of your finances, the more likely you are to achieve the lifestyle you want in retirement.

Just by checking your super statement when your fund sends it at least every 12 months can be useful for understanding how you are progressing towards your financial goals. If you are an Essential Super customer, you can keep track of your super balance and statements in NetBank.

Evaluating how your super is invested and whether it suits your current circumstances can make a difference many years down the track.

You can use a retirement calculator to estimate how much money you may need and how much you might have when you retire.

You can talk to a financial planner to see what your options might be at any stage, whether you are working at the time or not.

Co-contributions and spouse contributions

If you earn under a certain amount each year, and make after-tax contributions to your super, you might qualify for a Federal Government co-contribution. Check the ATO website for more details to see if you might be eligible.

In addition, your spouse might be able to add after-tax money into your super while you are not working - this could allow them to qualify for a tax offset of up to $540. Check the ATO website for more details.

Find lost super

Any employment you have ever had might mean you were being paid superannuation by your employer.

But if you don’t have a record of it, you can still track it by contacting the ATO.

For Essential Super customers who provide their tax file number (TFN), a SuperMatch search of the ATO data base can be done for no cost.

Consolidate super accounts

If you have more than one super account, you are likely to be paying multiple administration fees.

You can choose to consolidate all your accounts, but you should check how this might affect any insurance arrangements you hold as part of your super.

You should consider any exit fees that might apply and also if there could be any investment implications.

Taking control

Maximising what you have for your retirement years might seem challenging, particularly if there are times in your life that you are unable to work or you want to take a career break.

Planning ahead, knowing what options are available and contributing more to your super when you are able can help to make a difference to achieving the lifestyle you would like in the future.

This article is intended to provide general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Investors should consult a range of resources, and if necessary, seek professional advice, before making investment decisions in regard to their objectives, financial and taxation situations and needs because these have not been taken into account. Past performance is not indicative of future performance. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning Pty Ltd ABN 65 003 900 169 AFSL 231139 a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 (the Bank). Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435. This information is not financial product advice and does not take into account any person’s individual objectives, financial circumstances or needs. You should read the Product Disclosure Statement (PDS) for Commonwealth Essential Super and consider talking to a financial adviser before deciding whether to acquire or continue to hold this product. Download the PDS (https://www.commbank.com.au/content/dam/commbank/personal/apply-online/download-printed-forms/EssentialSuper_PDS.pdf), collect one from any branch of the Commonwealth Bank or call us on 13 4074 and we’ll post one out to you. Colonial First State is a wholly owned subsidiary of 'the Bank'. The Bank and its subsidiaries do not guarantee the performance of Essential Super or the repayment of capital by Essential Super. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. An investment in Essential Super is subject to risk, loss of income and capital invested. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.