How to shore up your retirement without paying a cent

Our super is all over the shop right now. US President Donald Trump and his policies are playing havoc with it. And our government – yet again – is changing the rules of it.

This when you desperately need it to come through for you when it counts, to afford the life you want in retirement.

No need to pay out of pocket – you can get superannuation advice from your fund.Credit: Marija Ercegovac

But did you know you can check if your super fund will model your best super moves and devise the most lucrative strategy the system offers in your circumstances for no out-of-pocket cost?

New research shows nine in 10 Australians do not realise that (much like you can claim your accountant’s fees for sorting your tax on your tax return) you can make your super pay for super advice.

A Colonial First State survey of more than 2000 people has revealed a stunning lack of awareness that if financial advice relates to using super to save for retirement, the cost of that advice can be deducted from your account itself.

While you can get a full strategy on your super fund from your super fund, you can also get guidance on just one aspect of it, too. What’s called episodic advice is available from advisers and potentially direct from your super fund, at a cost to your balance that may start at just $500.

Amid sharemarket volatility and legislative uncertainty, this is an immediate way to shore up your future.

In the cost-of-living crisis, the CFS research suggests a renewed appetite for advice; two in three people want to see the federal government implement changes to make it more accessible.

Now that hidden and high trailing commissions are banned, the cost of being fully advised across all aspects of your financial life starts at $3000 a year and goes up from there (any super component can be split out and paid from within).

As a result, both the numbers of people taking advice and the numbers of practising advisers have plummeted. Women, at 67 per cent, and those aged 40 to 49, at 71 per cent, are the most eager to see legislative changes that will improve access, says CFS.

This is heartening when females are systematically disadvantaged by super both because it is wage-based and based on the time earning that wage. We still typically, bizarrely, earn less than men and remain the more likely parent to take the career breaks to care for kids.

Certain age milestones are also triggers – and important ones – for a super mind-shift. The research suggests the first one, turning 40, but the other big one is hitting 50. Suddenly, most people start eyeing super with the exquisite anticipation of a delectable dessert, and they want it to be as sweet as possible.

So how could you achieve this?

• You could make a co-contribution of $1000 after tax to receive an up to $500 government top-up (only if you earn under $60,400 this tax year).
• You could do an after-tax spouse contribution in your partnership; $3000 nets the payer a $540 tax offset (only for those earning under $40,000).
• You could arrange a before-tax salary sacrifice into super, staying within the $30,000 allowable annual cap and considering the ability to mop up four previous years of unused caps.
• You could implement the transition to retirement, virtuous tax circle technique while still working, where you draw the tax-free pension after age 60 while paying in extra to super before tax, thus sheltering more money but keeping your income the same.
• You could ask whether it’s worth starting an account-based pension … and which one.
• You could weigh a $300,000 available downsizer contribution to super (on your home’s sale so long as you’ve owned for 10 years) against the effect on any government age pension entitlement.
• You could plan to avoid the extra 15 per cent tax on unrealised gains in your fund. This is proposed to start at $3 million balances but it is not, at this stage, going to be indexed, so modelling shows today’s millennials will be liable for this new, annual tax.

So how do you get your super fund to pay for all of this? You simply complete a form on your super fund’s website that will be called something like an adviser service fee form.

It is still a little, well, loose as to precisely what super advice can be claimed. And with advice reforms under way, this needs to be clarified.

But amid sharemarket volatility and legislative uncertainty, there is an immediate way to shore up your future. And some of the above super opportunities for this financial year expire in just four weeks.

So, consider getting advice. Soon.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, Twitter, and Instagram.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter.