Benefits to low-income earners contributing to super
Just as autumn is upon us, now is that time of the year when you should proactively plan for the end of the financial year on June 30 and while you might think otherwise, this is particularly the case if you are on a low income.
The Federal Government has put in place several strategies to help low-income earners boost their superannuation balance and I would urge everyone on a low income to consider implementing at least one of these initiatives.
I know your first response will be most likely that “My super balance is so low it’s not worth worrying about’, but I know from experience that is not the case.
That just focusing on getting $100,000 into super by the time you retire will make a huge difference to the quality of life you can enjoy throughout your retirement and by following three simple steps you could have an extra $55,000 in super in ten years’ time.
More if you have a modest wage of $37,000 a year, your employer will be forced to contribute 12.5 per cent during the next 10 years or a total of $46,250. Combine this with the following strategies, you could easily put an extra $100,000 into super.
Firstly, you should take advantage of the Federal Government’s co-contribution strategy. Under this scheme, if you earn less than$62,488 and you contribute $1,000 of after-tax money to your super, you will get an automatic contribution of $500 from the Federal Government paid directly to your super account when you complete your tax return each year.
Secondly, if you are married and earning less than $37,000, you should receive the low-income super tax offset which will mean receiving an additional government payment of $500 directly to your super account
Finally, if you earn less than $40,000, your partner can contribute up to $3,000 to your super account each year and so obtain a tax offset of $540, which you could also then contribute to your super.
All up this would mean some $5,500 potentially going into your super each year and some $55,000 across 10 years, of which a third would come from the Federal Government. These are strategies worth taking advantage of.
More from July 1, 2026, whenever you receive a wage payment your employer will be forced to make a compulsory super contribution of 12% at the same time. This will help ensure you get paid your full super and help fast track you to $100,000 in super.