Once you reach super ‘preservation’ age, you can utilise salary sacrifice strategy to boost your super balance using pre-tax income, whilst maintaining cash flow via a transition to retirement pension. This results in net benefit to you, with reduced taxes payable and more super for your retirement, as funds contributed to super are only taxed at 15%, versus paying tax at your marginal rates.
If you aren’t ready to retire, but have surplus income, a salary sacrifice strategy could help boost your super and ensure a much more comfortable retirement. With cash and term deposit rates at all time lows, now might be a good time to consider moving your surplus cash into super to ensure the funds grow at a more attractive rate.
In addition, once you start an account based pension (assuming you are over age 60 and have ceased gainful employment), you can draw funds out of your super tax free, and your investment earnings are no longer taxed, which equates to the most tax effective vehicle for your retirement.