When one in five current retirees say that their retirement finances are worse than they’d anticipated, it’s clear that it pays to get prepared before retirement.1 There are a number of strategies to boost your retirement finances, but there’s one option that offers a new way to top up your super without even noticing a change to your budget.
The tax changes that came into effect on July 1 20242 offer a new opportunity for pre-retirees to save on tax, contribute a little more to their super and make a big difference to their super savings, without taking a huge hit to their take home pay. This article will explain how diverting tax savings, plus adding little extra into topping up your super works and what a difference it could make by the time you retire.
Tax tips
The new stage three tax cuts have arrived, and since 1 July, we've all been enjoying a little more take-home pay. These tax cuts provide anywhere from $354 annually for those on a yearly income of $30,000, up to $4,529 for high-income earners.3 For some, the extra cash will need to go straight to covering essential expenses. But if you can do without the top up to cover your living costs, redirecting your tax savings into your super fund as extra contributions could make a big difference in the future. For instance, a 55-year-old earning $80,000 who adds their weekly $40 tax cut to super could have almost $25,000 extra by retirement at age 67.4