Blog

The latest personal finance tips and insights for Australians at home and abroad

Supercharge Your Savings – Big 4 Superannuation Changes for Aussies

Today, we’re going to explore how you can give your savings a bit of a boost. You see, from 1 July 2023, there are four big changes happening to superannuation that will help all Australians, whether living and working abroad, or those at home in Australia.

Are you eager to energise your savings and leverage the imminent changes to superannuation to your advantage? If you said ‘yes’, then you’re in the right place at the right time. These changes can make your super grow, and in this article, we’ll walk you through each one.

#1 – More Super from your Employer

Great news! Your super is about to grow faster. How? Well, the Superannuation Guarantee rate, which is the amount your employer has to pay into your super, is increasing from 10.5% to 11% from 1 July 2023. This means you’ll see more money going into your super account, which is always a good thing.

Let’s look at Jane, for example. She earns $70,000 a year. Before the change, her employer was putting in $7,350 per year into her super (10.5% of her salary). But with the new rate of 11%, her employer will have to put in $7,700. That’s an extra $350 every year, which may not sound like a lot, but over 20 years, this could equate to more than $16,000 in increased savings for her retirement.

Make sure you’re getting the most out of this by checking what your employer is contributing and if there’s anything else you can do to boost your super savings.

#2 – Total Super Balance Cap Rising

Now, for those of you who have been carefully putting money away into your super, there’s some good news. The total super balance (TSB) cap, which includes the sum across both the retirement and accumulation phases, is set to grow from $1.7 million to a whopping $1.9 million.

As an example, imagine you’ve saved $1.7 million already, reaching the cap. With the increase, you can now contribute an additional $200,000, allowing you more room to make non-concessional contributions and catch up on any unused ones. This may be an opportunity that you don’t want to let pass. Evaluate whether you can enhance this windfall by injecting more money into your superannuation account, all while enjoying the generous tax concessions on offer.

Imagine you’re like John, who managed to save up the cap of $1.7 million in his super. With the new increase, John now has room to put in an extra $200,000 into his super! This means you can save more in your super and take advantage of the key tax benefits of superannuation also..

#3 – Transfer Balance Cap Rising

On 1 July 2023, the transfer balance cap (TBC), limiting the amount you can inject into tax-free pension accounts, will see an automatic upturn from $1.7 million to $1.9 million. Unfortunately, those who retired before this date and hit the cap won’t fully enjoy the benefits of this growth. However, those with lower balances can absorb a proportional rise, bridging the gap to align with the new rate.

But let’s say you’re like Peter, who retired before this date and already reached the old cap of $1.7 million. In that case, you won’t be able to add more to match the new limit. But if you, like Mary, retired with a balance of, say, $1.5 million, you could add a bit more to reach the new cap of $1.9 million. So, make sure you check your plans and are making the most of the new higher cap.

It’s crucial to regularly review your retirement plans and strive to optimise the higher cap without violating any anti-avoidance rules.

#4 – Pension Withdrawals Return to Normal

During the pandemic, the government halved the amount you had to take out of your pension account. But from 1 July 2023, the rates are going back to what they were before, ranging from 4% to 14% depending on your age.

However, if you find yourself not requiring the surplus cash, numerous strategies can be employed to bolster your savings. Consider reinvesting the savings into your superannuation account, establishing a personal fund that mirrors your super fund portfolio, or gifting the cash to your loved ones for investment purposes.

For example, let’s take George who’s 65 and has $500,000 in his pension account. During the pandemic, he was only required to take out 2% or $10,000 a year. But now, he’ll need to take out 4% or $20,000 a year. If George doesn’t need that extra cash, he could consider putting it back into his super or saving it somewhere else.

Conclusion

These transformative changes are golden tickets for Australians, providing remarkable opportunities to nurture their superannuation savings and secure a prosperous financial future. Ally Wealth Management is at your service, providing expert guidance and support to help you capitalise on these changes.

Why not schedule a complimentary call with our team of experts? We’d love to discuss how you can optimise the superannuation reforms to ensure your super is pulling its weight. Our seasoned financial advisers will offer personalised, tailor-made advice to meet your unique needs, aiding you in navigating the intricacies of superannuation.

Don’t let this golden opportunity slip through your fingers. Step up and seize the day to energise your savings. Schedule your complimentary call with Ally Wealth Management, and let us navigate you towards a financially secure retirement. Your future self will thank you!

Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.

Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.

Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.

General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.

Share on:

You might also like

Should You Participate in Your Employee Share Purchase Plan

If you’re an Australian expat, navigating the world of employee benefits in a foreign country can feel like charting unfamiliar…

Share on:
Read more

Top Ways to Invest for a Rising Australian Dollar

As an Australian expat, your financial well-being is often closely tied to the fluctuations of the Australian Dollar (AUD). With…

Share on:
Read more

Navigating Work Visas for Australian Expats in Hong Kong

Are you an Australian expat eyeing Hong Kong as your next career destination? If yes, then understanding the ins and…

Share on:
Read more

Start your financial advice journey with Ally today.