Australians falling behind on superannuation

Australians are increasingly looking to self-fund their retirement, but many face a shortfall in their superannuation, a survey* has revealed.

The survey – which encompassed 2,300 Australians aged between 18 and 65 – identified a gap between how much people hoped to accrue in super and how much they would need to fund their lifestyles.

The results show baby boomers expected to add an additional $197,797 to their super funds before retirement, but would need an additional $430,691 to retire comfortably. Similarly, Generation X expects to add $334,613 to their funds, yet needs a further $330,718 to fund their retirement. According to the data, Generation Y were in the best position,expecting to add $476,488 to their accounts and falling short by just $96,251 of the required amount.

How much can you invest in super this financial year?

Here are the superannuation contribution caps which apply for the 2015/16 financial year.

Contributions which qualify for a tax deduction

These are known as concessional contributions and the limit is aged based, as shown below. Generally you can only qualify for a tax deduction if you are self-employed.

However employees can benefit as well by making a contribution through salary sacrifice.

The limit includes any Super Guarantee your employer pays on your behalf.

            Age            Tax deductible limit (2015/16)
          Up to 49                   $30,000
             50+                       $35,000

Contributions which do not qualify for a tax deduction

You could also invest up to $180,000 p.a. in super as a non-concessional contribution (i.e. you do not receive a tax deduction on this contribution). If you are under age 65, you can ‘bring forward’ up to two years of non-concessional contributions. This means you could contribute $540,000 in one financial year, but you would not be allowed to make non-concessional contributions in the following two financial years.

The Government co-contribution

Currently, eligible workers earning up to $50,454 who make personal contributions to super can take advantage of the Government co-contribution of up to $500.

Spouse contributions

If your partner’s income is less than $13,800, you could qualify for a tax offset of up to $540 on the first $3,000 you contribute to superannuation for them from your after-tax income. This tax offset decreases as your partner’s income increases above $10,800.

*Survey results by Rabodirect reported in IFA Magazine 29 October 2014