Proposed changes to retirement age may retires think about your super.

You have no doubt heard the media talking about the Government proposing to lift the ‘retirement age’ to 70 by 2035. This is a little misleading because they are actually referring to the age you could qualify for the age pension, not the age at which you might be ‘allowed to retire’.

The fact is you’ll still be able to retire at any age as usual, but you won’t qualify for the age pension until you are at least 70 (assuming the proposals become law, of course).

In order to build a lump sum big enough to fund a comfortable retirement where you are not reliant on the age pension – and to fund an early retirement if you can – it can be a good strategy to contribute as much as you can to super, as often as you can.

That’s because superannuation is still the most tax effective way to save for retirement. It’s not the only strategy, however, which is why you should consult regularly with your financial adviser to find out how you are tracking against your retirement savings goals and what, if anything, you need to do to boost or protect your savings.

How much can you invest in super this financial year?

Here are the superannuation contribution caps which apply for the 2014/15 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 (2014/15)
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 nonconcessional 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 nonconcessional contributions in the following two financial years.

• The Government co-contribution
Currently, eligible workers earning up to $49,488 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.