Money
How to supercharge your super in your final working years
Your final years before retirement offer unique opportunities to boost your nest egg and transform your retirement savings.
By Carolyn Tate
Retirement is something that seems far-off and hazy for most of our working lives, but once you hit your 50s and 60s, that distant mirage starts to crystallise into something more tangible. If the version of your retirement that is coming into focus doesn’t look quite as good as you were hoping, it’s not too late to do something about it.
The final decade of work before you retire can actually be one of your most powerful opportunities to have an impact on your financial future. While your working years may be winding down, your earning potential is probably at its peak and hopefully your home loan is at its lowest and many of us now have an empty nest (although, click here if you don’t!). Strategic moves during this critical period can add a significant amount to your retirement nest egg.
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The sums are compelling: an extra $10,000 contributed to super in your mid-50s could grow to over $15,000 by retirement age at 65 through compound returns (multiply those figures and you get some even more impressive returns). But it's not just about the money you add – it's about understanding the strategies that can amplify every dollar you contribute while reducing your tax burden along the way.
Director of Your Vision Financial Solutions, Patricia Garcia, says, “It‘s not too late to get financial advice and take advantage of all the super boosting strategies available, especially when you are close to being able to access your super.”
The final decade advantage: why these years pack the biggest punch
Your final working decade can offer unique advantages that younger workers can only dream of. You're probably earning at or near your career peak, which hopefully means you have more disposable income to redirect into superannuation. You're also approaching the age where catch-up contribution rules come into play, effectively giving you a second chance to maximise the years where you didn’t contribute as much as you could have.
The power of compound interest means that even contributions made just five years before retirement can grow significantly. A $20,000 contribution at age 60, assuming a modest 6% annual return, becomes over $30,000 by age 67. More importantly, you're now old enough to access certain strategies – like transition to retirement (TTR) pensions – that weren't available in your younger years.
If you’re age 60 or close to age 60, Patricia suggests you contact a financial adviser to find out more about how a transition to retirement strategy may help you reduce your income tax and boost your super fund balance.
“One of the most consistent types of feedback we get from our clients is that they wish they had come to see us sooner,” she says. “The earlier you get the advice the better prepared you will be for retirement, and sometimes not doing anything can be a big mistake.
“A lot of unadvised clients lost hundreds of thousands of dollars during the Global Financial Crisis as they were not prepared for something like that and were not educated enough to know how to ‘ride out’ the market correction.”
Patricia says it’s important to make sure your super is invested appropriately for when the next significant market correction happens. “This means you’re not put in a position where you might make emotional decisions that could end up costing you a lot of money,” she says.
“The best way to prepare is to get financial advice from a qualified financial adviser and make sure you don’t have a ‘set and forget’ strategy, so you’re making changes to your strategy as life changes and as the rules change.”
Salary sacrifice: your tax-efficient super booster
Salary sacrifice remains one of the most powerful tools for building superannuation wealth while reducing your tax burden. By redirecting part of your pre-tax salary directly into super, you're effectively paying 15% tax on those contributions instead of your marginal tax rate, which could be as high as 47%, including the Medicare levy.
For the 2024-25 financial year, the concessional contribution cap sits at $30,000, which includes both your employer's compulsory super guarantee contributions and any salary sacrifice amounts. If your employer contributes $12,000 annually through super guarantee, you have $15,500 of salary sacrifice room remaining.
You may also be eligible to make extra contributions if you meet certain conditions, via the concessional catch up contributions if your total superannuation balance as at the end of the previous financial year was less than $500,000. It is important to seek professional advice on this.
“You can salary sacrifice via your employer, or you can also make personal deductible contributions from your bank account,” says Patricia. “If you do choose to make personal deductible contributions, it’s important to note that you need to fill out a notice of intent to claim a tax deduction form, to ensure the super fund is aware you want to claim a tax deduction on this contribution. There are other rules and traps as well that you need to be aware of, so again, seeking professional advice is always a good idea.”
The timing of salary sacrifice contributions can be particularly strategic around bonuses and pay rises. Rather than taking a bonus as cash and losing up to 47% to tax, redirecting it into super as a concessional contribution means you may be able to keep 85% of its value working for your retirement (subject to other maximum income requirements).
Catch-up contributions: your second chance strategy
One of your most valuable opportunities is the ability to make catch-up concessional contributions using unused contribution caps from previous years. Since the 2018-19 financial year, any unused portion of your annual concessional contribution cap has been carried forward, creating a pool of additional contributions you can access later.
To be eligible for catch-up contributions, your total superannuation balance must be less than $500,000 at the end of the previous financial year. If you meet this test, you can potentially contribute significantly more than the standard annual cap by using your accumulated unused amounts.
“It’s important to get financial advice and plan when to best use these, so you can make the most of the extra tax deductions they offer,” suggests Patrica. “For example, you could accumulate them on purpose to get a bigger tax deduction in the same financial year as when you are expected to have a higher taxable income – that is, when you sell a share portfolio or get a big bonus.”
Transition to retirement: earning while accessing super
TTR pensions are one of the most sophisticated strategies available to workers over preservation age (currently over 60). A TTR pension allows you to access between 4% and 10% of your superannuation balance each year while continuing to work, creating opportunities for tax-efficient wealth building.
The strategy will usually involve establishing a TTR pension, drawing the minimum annual payment (or more, up to the maximum allowable), and salary sacrificing back into super (although this is not compulsory). This approach can reduce your taxable income while maintaining your take-home pay, effectively allowing your superannuation to grow in a more tax-efficient environment.
“As a minimum you can reduce your income and maintain the same take home pay, but there are also other opportunities here where you may on purpose withdraw more from super to, say, pay off your home loan sooner or take advantage of the concessional catch up contributions,” says Patricia. “Getting financial advice can help make sure you’re taking advantage of the right strategy for you.”
Some more advanced tactics
Beyond the mainstream strategies, there are also some more advanced tactics which can further supercharge your super in your final working decade.
Once you are over 55 years of age, and especially close to 60, there are various strategies you can consider, so this is an excellent time to review your investment options within your superannuation fund to better align these with your retirement goals and timeframes.
“Sticking with the default investment options is not usually recommended, and a more bespoke approach can really help,” says Patricia. “It’s never too late to seek to improve your financial situation so don’t wait any longer and seek professional advice.
“You don’t know what you don’t know and many people miss out on strategies that could be beneficial to them as they don’t act and don’t get advice.”
Bring-forward non-concessional contributions
Non-concessional contributions allow you to contribute up to $120,000 each year from your after-tax income without triggering additional tax, provided your total superannuation balance is under $2 million (from FY 25/26). You may also be able to bring-forward up to three years of contributions and make $360,000 in non-concessional contributions in one financial year.
Spouse super contributions
"You may be eligible for a tax offset of up to $540 if you contribute to your spouse’s superannuation, provided your spouse’s annual income is below $37,000 (the offset reduces as income rises and cuts out at $40,000),” says Patricia. “You can claim an 18% tax offset on up to $3,000 of after-tax contributions made to your spouse’s super account. This strategy helps to boost the retirement savings of a lower-earning partner while providing a tax benefit to the contributing spouse.”
Downsizer super contributions
For those over 55 who are considering moving house, the downsizer contribution rules allow up to $300,000 per person ($600,000 per couple) to be contributed to super from the proceeds of selling a home you've owned the home for at least 10 years and if that home was considered your principal place of residence for at least part of the ownership period.
“There are a lot of rules and timeframes that need to be met here so please ensure you seek professional advice,” says Patricia. “The other important note that most people don’t realise is that you do not need to be downsizing, as such, to qualify.
Common pitfalls to avoid
The complexity of superannuation rules means mistakes can be made easily – and they can be costly. Contributing too much and exceeding caps can trigger excess contribution tax at penalty rates and/or extra charges. Failing to consider the total superannuation balance test can disqualify you from valuable strategies like catch-up contributions or non-concessional contributions.
Timing also matters enormously. Contributions must be received by your super fund by 30 June to count towards that year's caps, and salary sacrifice arrangements need to be in place before you earn the income you want to sacrifice. Many people miss opportunities simply because they start planning too late in the financial year.
No excuses: 5 steps to make a retirement plan in less than an hour
“If you are late in setting up a salary sacrifice strategy, it may be beneficial to consider personal deductible strategies, as outlined above,” says Patricia.
Your action plan: steps to take this week
Every day is a great day to start looking at what you can do differently to supercharge your super. Here are a few steps you can take, starting this week:
- Log into your myGov account and check your superannuation balance and any unused contribution cap amounts. This gives you a clear picture of your current position and an idea of what opportunities might be available. It is recommended to cross-check these against the individual super fund reports to ensure the data on the ATO portal is correct.
- Review your current salary sacrifice arrangements with your payroll department. Even increasing your contributions by $50 per week can make a meaningful difference over time whilst reducing your current tax burden. However, it is always best to seek financial advice to ensure salary sacrifice is indeed a good strategy for you.
- Contact your superannuation fund to understand their investment options and ensure your money is invested appropriately for your age and risk tolerance. Many funds offer free advice sessions that can help you optimise your strategy within their platform.
- Calculate whether you'd benefit from professional financial advice. The strategies available in your final working decade can be complex, and the cost of advice is often far outweighed by the additional wealth it can help you build. Look for advisers who specialise in pre-retirement planning and have experience with the specific strategies most relevant to your situation.
“A relationship with a financial adviser is usually a long-term one and it’s important to continue to review your strategy each year, so look for a financial adviser you feel comfortable with and can build a good rapport with,” suggests Patricia. “Trust is paramount as well, so check out their reviews and client testimonials.”
Your final decade before retirement offers a range of opportunities to have a big impact on your financial future. With strategic thinking, proactivity, and perhaps some professional guidance, you can finish your working years with a flourish rather than a whimper.
This article contains general information only. It is not financial advice and is not intended to influence readers’ decisions about any financial products or investments. Readers’ personal circumstances have not been taken into account and they should always seek their own professional financial and taxation advice that takes into account their financial circumstances, objectives and needs.
Feature image: iStock/Deagreez
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