If there’s one thing I wish to change your minds about, it’s that your retirement savings fund can actually be really f**king cool.

When you manifest retiring, being well and truly done with micromanaging bosses, dull coworkers, and a coffee machine that’s always broken, how often do you think about your super?

Many people focus on property and stocks when it comes to building wealth - but they often forget that super is in the picture too. 

In fact, for most people, super is one of their biggest investments. Ever. Period. Let that sink in. And for many people, it’s the investment that they abandoned harder than a New Year’s resolution in the second week of January. 

But, lets be honest, chances are, you chose a superfund years ago, and have stuck with it since without giving it much additional thought.

So I hope you’ll allow yourself the next 45-90 seconds to understand what investing in your super could do to change your retirement fund all together.

Most of our super is built through the Super Guarantee

The main way most people grow their superannuation is through employer contributions - aka the Super Guarantee (SG). This is currently set at a minimum of 11% of your base salary as of July 1 2023, but it will increase to 11.5% on July 1 2024.

That means, if you earn $80,000, your employer will be required to contribute $8,800 into your chosen superfund.

But you’re not limited to just your employer's contributions - you can make your own contributions to your super too, using either your before-tax or after-tax income.

We break this down in a whole lot more detail in the Flux Academy on Super.

Before-tax super contributions aka salary sacrificing

Depending on your employer, you may be able to set up an agreement to salary-sacrifice into your super, ie. have some of your before-tax salary directed straight into your super.

The before-tax part is crucial - because with salary sacrificing, you could end up paying less income tax. That’s the government’s way to incentivise us to save for our retirement.

“Why don’t you contribute more to your super today and we’ll take less tax from you”.

Your super is taxed at 15%, which is no doubt a lot lower than your marginal tax rate (if you’re above the tax-free threshold). 

When you salary-sacrifice into your super, these contributions are also taxed at 15%.

Here’s an example:

Let’s say you’re earning $80,000 per annum:

• If you choose to salary sacrifice $10,000, you’ll pay $1,500 in tax (15% tax rate)
• If you choose not to salary-sacrifice $10,000, you could pay $3,250 in tax (32.5% marginal tax rate)...or even more!

By salary sacrificing, you’re able to save $1,750 in tax. That extra money goes into your superfund, where it will grow your retirement balance.

The only downside - you won’t be able to access any of this money until you hit retirement.

But, there’s a limit to how much you can salary sacrifice

Sadly, you can’t have too much of a good thing. You can only salary sacrifice up to $27,500 per financial year, including the amount that your employer pays as part of your super guarantee.

So if your employer is contributing $8,800 into your superfund, you can only salary sacrifice an additional $18,700.

‍After-tax super contributions aka non-concessional contributions

After-tax super contributions are contributions to your super fund after the money hits your bank account. In other words, you’ll pay tax on this income at your marginal tax rate…and then it goes into your super fund.

But don’t get put off - after-tax contributions can still be very beneficial.

Firstly, you’re investing in your retirement fund and putting that money aside to grow and compound. Kinda like a piggy bank for your future.. That can only be cracked open once you’re over 65.

Secondly, any gains made within your superfund will only be taxed at 15% - as opposed to your marginal tax rate.

After-tax contributions are quite easy to set up. Most superfunds let you do this via a direct debit.

You can make up to $110,000 worth of non-concessional contributions each year.

And that’s all. With all this info, hopefully it can help you re-think your super so it’s not the forgotten asset in your wealth-building strategy.