Although retirement may seem imminent, the potential financial advantages of increasing one’s superannuation after the age of 60 are still substantial. There are numerous strategies to optimise your superannuation, regardless of whether you are employed, selling assets, or inheriting and in this article, we help you discover how to boost your super after 60 years of age.

Here’s what you need to know:

Contribution limits and Total Super Balance (TSB)

Super contributions are subject to annual limits. So before you want to boost your super it is crucial to adhere to these restrictions as they legislation can change at any time and exceeding them may result in additional taxation.

• Concessional contributions (before-tax): $30,000 annual limit for financial year 2024-25.
• Non-Concessional contributions (after-tax): $120,000 annual limit for financial year 2024-25, or up to $360,000 using the Bring-Forward rule.

Your Total Super Balance (TSB), measured on 30 June of the previous financial year, determines your eligibility for:

• Non-concessional contributions and the Bring-Forward rule
• Carry-forward provisions for unused concessional caps over five years
• Government co-contributions and spouse contributions

You can check your TSB on the ATO’s myGov website, but it’s important to ensure the figures are up to date with your most recent contributions from your superfund.

You can see how much you are eligible to contribute using the Carry-Forward provision on myGov by checking under the tab ‘superannuation’ – you will see the amount of ‘unused pre-tax contributions’ you have available to use. To be eligible to make carry-forward contributions, your TSB at the end of the previous financial year must be less than $500,000.

Age limits and the work test

The majority of contributions can be accepted by your super fund if you are under 75. However, if you are between the ages of 67 and 74, you must satisfy the work test or work test exemption in order to claim a tax deduction for personal contributions.

Employer and Downsizer contributions may be accepted by your super fund at any time after you reach the age of 75. The deadline for making any voluntary contributions is 28 days following the conclusion of the month in which you reach the age of 75, so if you want to make use of the bring forward rule, you may need to plan this years in advance.

Understanding the work test

If you’re 67 or older, meeting the work test is key to claiming a tax deduction on personal contributions you make to super. 

• Work Test: 40 hours of gainful employment within a consecutive 30-day period during the financial year.

• Work Test exemption: Allows contributions for one more year if you met the work test in the previous income year, your TSB is under $300,000, and you haven’t used the exemption before.

Here are some examples:

Meeting the Work Test

Charlotte is a sales consultant

Charlotte, 68, retired from her full-time job but started sales consulting part-time, working 10 hours per week. In July, she completed 40 hours within a consecutive 30-day period, meeting the work test. This allows her to make personal contributions to her super and claim a tax deduction up to her concessional cap this financial year.

Failing the Work Test

Oliver earns passive income

Oliver, 72, retired two ago and earns passive income from property rentals. He no longer engages in gainful employment. Since he didn’t work 40 hours in any 30-day period this financial year or last financial year,  he does not meet either the work test or the work test exemption, and cannot claim a tax deduction for personal contributions. Oliver may still make non-concessional contributions if eligible.

Using the Work Test Exemption

Ruby is exempt

Ruby, 69, retired in June last year after working full-time. She met the work test in her final financial year and has a super balance of $250,000 as of 30 June. Since she hasn’t used the work test exemption before, she can make voluntary contributions in the current financial year despite not working.

Failing the Work Test Exemption

Henry’s balance is too high

Henry, 71, retired two years ago and has a total super balance of $320,000. Even though he met the work test in his final year of employment, his balance exceeds $300,000, so he doesn’t qualify for the work test exemption and cannot make further contributions this year.

Smart strategies to maximise contributions

Claim tax perks

Are you aware that you can claim a tax deduction for contributions to your superannuation that are made after the tax has been paid?

When selling substantial assets, such as an investment property or portfolio, where capital gains tax may be applicable, this approach can be especially advantageous. You are able to increase your super balance while simultaneously reducing your taxable income.

The “claiming a tax deduction on personal contributions strategy” is not restricted to the sale of an investment asset with gains; it is applicable in any tax year where taxable income is present. It could be implemented when one receives an inheritance or downsizes their residence, provided that it is structured appropriately and you understand contribution limits and tax benefits.

An illustration of this is as follows: Although the sale of your home is typically exempt from capital gains tax due to the main residence CGT exemption, you can allocate a portion of the net proceeds to claim a tax deduction for your after-tax contributions to superannuation if you are still working and earning taxable income when downsizing. In this manner, the proceeds from the sale of your property can be structured to capitalise on the following, contingent upon your eligibility:

• A tax deduction for your contribution, within the relevant concessional contribution cap ($30,000 in 2024-25 year)
• The Downsizer Contribution lifetime limit (up to $300,000 per person), which doesn’t affect your usual caps.
• The annual Non-concessional Contribution caps of $120,000 or Bring Forward provisions of up to $360,000 if eligible.

Small Contributions, Big Impact:

Salary Sacrifice Contributions

Your retirement savings can be significantly impacted over time by making minor, consistent contributions to your super. Salary sacrifice is one viable approach to help boost your super

Salary sacrifice enables you to contribute a portion of your pre-tax income directly to your superannuation, thereby reducing your taxable income and potentially reducing the amount of tax you pay. For instance, even a modest portion of your salary designated for superannuation can accumulate rapidly over time, thereby increasing your super balance, regardless of whether you are employed full-time or part-time.

The primary advantage of salary sacrifice for the majority of individuals is that these contributions are subject to taxation at a concessional rate of 15%, rather than their marginal tax rate which can be up to 47%. In general, this can be tax-effective if you earn more than $45,000 annually. If your income plus before-tax contributions exceed $250,000 per year, you are subject to a 30% tax on your salary sacrifice contributions if you are a higher-income earner.

Salary sacrifice can be a tax-efficient strategy to invest and increase your super balance, regardless of whether you are still working full-time or part-time. This is in contrast to paying your marginal tax rate on the amount you can afford to contribute to your future.

Boost your super with government co-contributions

If you’re a low or middle-income earner and make an after-tax contribution to your super, the government may match it, up to $500, giving your retirement savings an extra boost.

Younger spouse strategies

If your partner is not yet of Age Pension age their super will be exempt from the assets test.

Younger spouse contribution strategy

Transferring assets to a younger spouse’s super is a popular consultation during which Retirement Essentials advisers assist members. Such consultations often result in increased eligibility for a part Age Pension in addition to a  Pension Concession Card (PCC), but it is best to speak to a professional to ensure you get this right.

Contribution splitting to maximise Age Pension

If your spouse is younger and below Age Pension age, contribution splitting can also boost your super and Centrelink entitlements. Up to 85% of one year’s concessional contributions can be transferred to their account, provided they meet eligibility requirements.

This strategy doesn’t reduce the original contributor’s concessional cap but can improve your overall financial position. 

What could work for you?

There is no universal strategy for increasing one’s retirement savings, from downsizing to making consistent, modest contributions. Your strategy will be contingent upon your circumstances, objectives, and overall optimal balance and that is why it is important to seek advice from a Financial Planner before undertaking any of the strategies mentioned.

Are you uncertain about where to begin and want to know how to boost your super? An initial consultation with our team can assist in the identification of opportunities that you may not have been aware were feasible, thereby empowering you to make well-informed decisions regarding your superannuation and retirement benefits.

If you require assistance to understand your options or require guidance on strategies to assist you with your retirement planning, please don’t hesitate to reach out to our office on (02) 9188 1547 or email admin@rpwealthmanagement.com.au as we have office location in Oran Park and Baulkham Hills if you require an appointment.

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The information in this website and the links has been prepared for general information purposes only by our office and does not take into account your personal objectives, financial situation or needs. It is not intended to provide commercial, financial, investment, accounting, tax, personal or legal advice. You should, before you make any decision regarding any information, strategies, or products mentioned on this website, consult a professional financial advisor to consider whether it is suitable and appropriate for you and your personal needs and circumstances. RP Wealth Management is not liable for any strategies or information acted on from this article.