If you’re thinking about taking a break from work – whether it’s for study, family or any other reason – one of the major considerations is how it will affect you financially. You need to work out how you’ll cover your day-to-day expenses when you’re not receiving your usual income, as well as ensuring you have a buffer for unexpected costs.
Part of the financial equation that’s easy to overlook is your super. When you’re not working, you’re not receiving the superannuation guarantee (currently 12% of your salary) that your employer contributes. If you move to part-time work, your super will also reduce accordingly. And it all adds up – taking one or more career breaks can make a significant difference to your eventual super nest egg.
Fortunately, there are a number of ways that you can boost your super to help keep your retirement savings on track, before, during and after any career break you take.
Make Extra Contributions
The most obvious thing is to make extra contributions to your super before (and after) your time off. If you can increase your super contributions, even just a little, in the lead-up to your break, you can be offsetting at least some of the super you’re missing out on.
And don’t forget to check the relevant contribution limits to make sure you stay within them. For more details, see the relevant contribution limits from NGS Super.
Before-tax Contributions
Salary sacrifice can be a tax-effective way to contribute to your super, and even a small amount can add up over time. Read more on the NGS Super salary sacrifice page.
Your spouse may also be able to ‘split’ their contributions, transferring some of their super to you to boost your super balance. You can find out more about how this works on the NGS Super boost your partner’s super page.
After-tax Contributions
These are simply contributions you make from your after-tax income – if you get a small windfall, for instance. Find out more about how this works on the NGS Super after-tax contributions page.
Government Co-contribution
If you make voluntary after-tax contributions, you may also be eligible for a Government co-contribution of up to $500. More information, including potential entitlements and eligibility requirements, is available on the NGS Super after-tax contributions page.
Spouse Contribution
For couples, the partner who is earning more may be able to make a contribution to the super account of the lower-earning partner, and benefit from a tax offset. More information about how this works, including eligibility requirements, is available on the NGS Super boost your partner’s super page.
This is general information only and does not take into account your objectives, financial situation or needs. Before acting on this information, or making an investment decision, consider whether it is appropriate to you and read our Product Disclosure Statements and Target Market Determinations. You should also consider obtaining financial, taxation and/or legal advice tailored to your personal circumstances before making a decision. This information has been issued by NGS Super Pty Ltd ABN 46 003 491 487 as trustee of NGS Super ABN 73 549 180 515, RSE Licence L0000567 and AFSL 233 154.
Call NGS Super on 1300 133 177 if you would like to speak further, or you can discuss matters with an NGS Super Specialist or an NGS Financial Planner.
Past performance is not a reliable indicator of future performance. Please read our Product Disclosure Statements and Target Market Determinations before deciding if this product is right for you.
