Make the most of being a couple

When clients come to me to plan their retirements, typically if they have a partner, they will come together to speak with me as a couple to discuss their financial future and how they should structure their finances going forward.

However, I also have many clients in accumulation mode, that is they are still working and contributing funds to super, both themselves and their employers, and are effectively doing all the hard yards in building their superannuation balance and yet they do that as individuals.

In doing so, they are missing out on some worthwhile financial opportunities.

Firstly, some funds such as Netwealth will offer a family discount for families having more than one account with them. This may or may not be a significant amount in dollar terms depending on your account balance, but I am a firm believer that every dollar you keep in your pocket counts.

It also means your investment strategy can be boosted by putting in investment strategies that consider that there are the two of you investing and not just one. So together you can have a stronger, and more diversified portfolio.

But most importantly it means that as a couple you are probably not making the most of the Government benefits that could help you as a couple make the most of your combined super balance, particularly if one partner is a low-income earner and the other is not.

Firstly, there is the Federal Government’s co-contribution scheme. This is for low-income earners who contribute up to $1,000 a year of after-tax money to their super. The Government will add 50 cents to your super for every dollar you put in, up to a total of $500.

You don’t have to apply for it. You just make the after-tax contribution and then once the relevant tax return is lodged, the Government will automatically top up your super fund.  It applies fully to those earning up to $43,445 a year and gradually reduces until you earn $58,445 a year.

You may also be eligible for the low-income super tax offset. This is where the Government will refund come of the contributions tax you may have paid on super contributions through the year if your adjustable taxable income is $37,000 or less.

Again, you don’t have to apply for this. It will be calculated automatically by the Tax Office.

There is also the tax offset for super contributions made to your spouse’s super account. So, if your partner earns less than $40,000 a year, you can contribute $3,500 to their super account and obtain a tax offset of $540 for the year.

You can also split up to $85,000 of your concessional contributions or the contributions you claim a tax deduction for with your partner and this can be back dated to July 1, 2018, to ensure you make the most of your concessional contributions.

These last few issues are all tax based, and I am not a tax agent, so you should sit down and proactively ask you tax agent are any of these strategies appropriate for your situation so you can boost not just your super account but that of your partner.

When it comes to retirement, you will look upon your super savings as being jointly owned and I believe the sooner you do so as a couple the bigger will be your combined balance at retirement.