IN YOUR 20S

EXPERT TIP Jeff Gray, Cbus

1 Consolidate accounts. Each super fund you own will charge an administration fee, so consolidating your savings into just one well-diversified account could save thousands over your working life. Before you consolidate, check on termination fees, that you receive the same level of insurance and that your employer can contribute to your chosen fund.

2

Investment options. It is important to understand the difference in longer-term results achieved by growth options versus more conservative options. After all, you could be talking about an investment time frame of around 40 to 45 years of your working life followed by a potential further 20 to 30 years in retirement. Time is on your side here and a difference of just 1% or 2% a year in investment performance could amount to an additional several hundred thousand dollars or more over your working life.

3 Government co-contribution. For lower income earners (less than $51,813pa in 2017-18), the government will contribute an additional 50¢ for every $1 of after-tax contribution you make to your super fund, up to a maximum of $500pa.

4

Salary sacrifice. You simply ask your boss (the payroll department) if you can contribute some of your pre-tax wage into your super account before you pay tax on it. While most people will incur a 15% contribution tax, that could still represent a saving of up to 6%, 19.5%, 24% or 32%, including the Medicare levy, depending on your marginal tax rate.

5

Tax-deductible contribution: From July 1, 2017, everyone who is eligible to make a super contribution can now claim a tax deduction for it. This then produces a tax saving that is identical to making a salary sacrifice contribution.