Super hacks that could help you pocket up to $171,225 more at retirement

Want to give your super a bit of a boost? Check out these four simple hacks that could help you add as much as $171,225 to your balance by retirement.

We all have different visions of what we want our retirement to look like but regardless of what that vision is we all need money to help us fund that lifestyle. For most of us, super will be a big source of income at retirement and you may be looking for ways to build that up so that you can have the retirement you dream of.

The good news is there are a number of simple hacks that could help you boost your super balance by tens of thousands, if not hundreds of thousands, by the time that day comes. We have focused on four here and have crunched the numbers to demonstrate the potential difference these could make to your super balance at retirement.

Keep in mind these are hypothetical examples and the results will depend on your individual circumstances but the idea is to show you that there are things that you can do now that could help give you a bigger cash cushion when you hang up your work boots.

Take a close look at what fees you are paying

Fees can vary widely between super funds and you might be surprised just how much of an impact this could have on your super balance over the long term.

As a hypothetical example, Canstar looked at what difference switching from a fund charging 1.03% a year to one charging 0.27% a year (a difference of 0.76 percentage points) could make on someone’s super balance at retirement. As the table below shows, the younger you are when you make the switch the bigger impact it will have.

A 20-year-old could potentially have an extra $155,543 in their super by the time they are ready to retire by making the switch to a fund charging lower fees. For a 50-year-old, the difference is $39,918 – still nothing to sneeze at.

Potential benefit of switching to a super fund charging lower fees

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Source: www.canstar.com.au – 13/10/2023. Scenario begins at the start of the 2023-24 financial year. Starting balances based on average balance for each age group per APRA Annual Superannuation Bulletin (June 2022), starting gross annual income of $78,832 per ABS Characteristics of Employment – median employee earnings (August 2022), and retiring at age 67. SG Contribution amounts per Government announced rates are assumed to be paid into superannuation fund quarterly. Employer contributions are assumed to be taxed at 15%. “Balanced” fund determined by superannuation products on Canstar’s with a growth asset allocation between 60-80%. Gross investment returns assumed to be 7.22% p.a. based on the average annual 10-year return of APRA-regulated entities with more than 4 members per APRA Superannuation Bulletin (June 2022). Average life and TPD insurance premiums are assumed charged at the end of each year based on products available for each age group on Canstar’s database. Annual income and insurance premiums are assumed to increase with inflation each year. Inflation is assumed to be 2.5%p.a. due to the rising cost of living (CPI Inflation) plus a further 1.5%p.a. due to the rising community living standards. End balances at retirement are shown in “today’s dollars”, i.e. they have been adjusted for inflation. Please note all information on income and superannuation performance returns are used for illustration purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance.

Of course, this doesn’t mean you should find the cheapest super fund available and move all your money. Fees are definitely an important factor but they aren’t the only consideration. When comparing funds be sure to consider how the different funds have performed over the long term – ideally at least five years.

Also, if you are thinking about changing super funds make sure you don’t lose any benefits. Pay particular attention to your insurance because as Moneysmart warns: “If you change funds, you might not be able to get the same cover. Be particularly careful if you have a pre-existing medical condition or are aged 60 or over.”

Add your tax refund to your super each year

It’s always nice to get a bit of money back from the tax office after you have lodged your tax return. You may be tempted to use the cash for a little splurge but consider adding it to your super instead. Your future self will thank you for it.

Canstar crunched the numbers to show what adding a $2,500 tax refund into your super each year could mean for your balance at retirement and the results are impressive. If you start doing this at age 20, you could potentially boost your super balance at retirement by a whopping $171,225! Even if you start at age 40 it could mean an extra $85,112 at retirement.

Potential benefit of adding a $2,500 tax refund to your super each year

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Source: www.canstar.com.au – 13/10/2023. Scenario begins at the start of the 2023-24 financial year. Starting balances based on average balance for each age group per APRA Annual Superannuation Bulletin (June 2022), starting gross annual income of $78,832 per ABS Characteristics of Employment – median employee earnings (August 2022), and retiring at age 67. SG Contribution amounts per Government announced rates are assumed to be paid into superannuation fund quarterly. Employer contributions are assumed to be taxed at 15%. Net investment returns assumed to be 5.40% p.a. based on the average annual 5-year return of investment options with a growth asset allocation between 60-80% that are available for a 30 year old on Canstar’s database. Average life and TPD insurance premiums are assumed charged at the end of each year based on products available for each age group on Canstar’s database. Annual income, insurance premiums and extra after-tax contributions are assumed to increase with inflation each year. Extra annual contribution assumed to be tax-free. Inflation is assumed to be 2.5%p.a. due to the rising cost of living (CPI Inflation) plus a further 1.5%p.a. due to the rising community living standards. End balances at retirement are shown in “today’s dollars”, i.e. they have been adjusted for inflation. End balances at retirement are also rounded to the nearest three significant figures. Please note all information on income and superannuation performance returns are used for illustration purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance.

Salary sacrifice just $20 a week

Adding money to your super via salary sacrifice can be a great way to give your retirement fund a bit of an uplift. The good news is that even small amounts can make a big difference.

Canstar’s calculations show that a 20-year-old who salary sacrifices $20 a week could potentially be $58,594 better off at retirement. And someone who starts salary sacrificing $20 a week at age 50 could potentially boost their super balance by more than $17,000 by the time they hit 67.

Potential benefit of salary sacrificing $20 a week into your super

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Source: www.canstar.com.au – 13/10/2023. Scenario begins at the start of the 2023-24 financial year. Starting balances based on average balance for each age group per APRA Annual Superannuation Bulletin (June 2022), starting gross annual income of $78,832 per ABS Characteristics of Employment – median employee earnings (August 2022), and retiring at age 67. SG Contribution amounts per Government announced rates, and along with the salary sacrifice are assumed to be paid into superannuation fund quarterly. Employer contributions are assumed to be taxed at 15%. Net investment returns assumed to be 5.40% p.a. based on the average annual 5-year return of investment options with a growth asset allocation between 60-80% that are available for a 30 year old on Canstar’s database. Average life and TPD insurance premiums are assumed charged at the end of each year based on products available for each age group on Canstar’s database. Annual income, insurance premiums and salary sacrifice amount are assumed to increase with inflation each year. Salary sacrificing taxed at same rate as Super Guarantee contributions. Inflation is assumed to be 2.5%p.a. due to the rising cost of living (CPI Inflation) plus a further 1.5%p.a. due to the rising community living standards. End balances at retirement and total salary sacrifice amounts are shown in “today’s dollars”, i.e. they have been adjusted for inflation. End balances at retirement are also rounded to the nearest three significant figures. Please note all information on income and superannuation performance returns are used for illustration purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance.

Use a cashback service

How do you like the sound of getting money added to your super account each time you shop?  There are a number of cashback sites that offer this option and it can be a pain-free way to build up your super. Just make sure you don’t change your spending behaviour in order to get cashback.

As you can see from the table below, using a cashback service to contribute to super could potentially add between  $9,992 and $34,245 to your super balance at retirement depending on your age.

Potential benefit of using a cashback service to contribute to your super

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Source: www.canstar.com.au – 13/10/2023. Scenario begins at the start of the 2022-23 financial year. Starting balances based on average balance for each age group per APRA Annual Superannuation Bulletin (June 2022), starting gross annual income of $78,832 per ABS Characteristics of Employment – median employee earnings (August 2022), and retiring at age 67. SG Contribution amounts per Government announced rates are assumed to be paid into superannuation fund quarterly. Employer contributions are assumed to be taxed at 15%. Net investment returns assumed to be 5.40% p.a. based on the average annual 5-year return of investment options with a growth asset allocation between 60-80% that are available for a 30 year old on Canstar’s database. Average life and TPD insurance premiums are assumed charged at the end of each year based on products available for each age group on Canstar’s database. Annual income, insurance premiums and extra after-tax contributions are assumed to increase with inflation each year. Annual Cashback amount assumptions based on Boost Your Super’s Superannuation calculator. Inflation is assumed to be 2.5%p.a. due to the rising cost of living (CPI Inflation) plus a further 1.5%p.a. due to the rising community living standards. End balances at retirement and total salary sacrifice amounts are shown in “today’s dollars”, i.e. they have been adjusted for inflation. End balances at retirement are also rounded to the nearest three significant figures. Please note all information on income and superannuation performance returns are used for illustration purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance.

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