Super strategies the rich use to boost their retirement nest eggs
Wealthy people use superannuation wisely, and their tips and tricks can be adopted by anyone wanting to grow their nest egg.
A retired couple can hold millions in investments and pay absolutely nothing in tax on the income and capital gains those assets generate. Not a cent. Yet most Australians with superannuation are leaving this powerful wealth-building structure dramatically underutilised, treating their super as just another investment rather than how the wealthy view it: a tax engine designed to minimise what they pay the tax office and maximise what they keep for their retirement.
A couple can hold $4m of combined investments in superannuation and not have to pay a cent of tax on the income and capital gains that those assets produce. If you’re extra savvy you there’s a way to pay no income tax on $5m.
And self-managed superannuation, often touted as a plaything for the rich, is not necessarily the best option for all wealthier super savers – especially as new rules will reduce the tax benefits for balances above $3m per person.
Superannuation nest eggs of $2m-$3m are dramatically higher than the average Australian super balance of almost $173,000, or $421,000 for people aged 65-to-69, and even well-to-do super savers have regrets.
Perks Private Wealth director Simon Wotherspoon said a common message from wealthier clients was that they wish they had started earlier, and contributed more aggressively when they could.
It’s a good tactic to adopt, and there are plenty of other superannuation strategies used by rich people to get richer.
Couples can work as one
“Super is first and foremost a tax structure – offering concessional tax rates while you’re accumulating and dropping to 0 per cent in retirement,” Mr Wotherspoon said.
He said it was common for wealthy couples to optimise their super across two sets of contribution limits to give themselves flexibility and tax efficiency.
Super contribution caps are on a per-individual basis, and currently sit at $30,000 a year for concessional (tax deductible) contributions and $120,000 a year for non-concessional contributions.
“They maximise contributions early and consistently, because compounding accelerates in a low-tax environment,” Mr Wotherspoon said.
“Super isn’t just a retirement fund – it’s a tax engine that compounds wealth over decades.”
Wealthy clients made super moves in their 30s and 40s, not just from their 50s, Mr Wotherspoon said. “They use structured contribution planning to maximise caps every year, and build high-conviction portfolios that integrate seamlessly with their companies and trust structures,” he said.
Cash from large, lumpy asset sales – such as a property – can be funnelled into super using the bring-forward rule for non-concessional contributions, where two future years can be added in the same financial year – so $360,000 per person in one hit.
Never too late to boost super
Don’t worry if you’re a late starter. Rule changes in 2022 made it easier to quickly build up a multimillion-dollar super balance even for those beginning in their 50s or 60s.
Financial strategist Theo Marinis said non-concessional contributions could be made each year up until age 75, following the removal of the work test that previously limited them after age 67, and this meant that many people could pump plenty of money into super in the decade before retirement.
“People at age 60 have 15 years of $120,000 per year, times two for a couple, to throw money into super as non-concessionals, so there’s plenty of time,” he said.
Mr Marinis said maximising both non-concessional and concessional contributions was the key to building a big balance.
“If it’s a couple, make sure each member is taking advantage of them,” he said.
“For up to $5m (of investments) you can make a retired couple virtually tax-free due to the low-income tax offset tax-free threshold of $22,575 each, or $45,150 combined.
“So $2m each in a superannuation pension, and $1m in ther bank at, say, 4.5 per cent will be tax-free when half each.”
Smart super strategies
Another powerful strategy is cashing out your super after age 60 then recontributing through non-concessional contributions, which helps seniors avoid Australia’s de facto death tax of 17 per cent of super money paid to non-dependants, such as adult children, after the super fund member dies.
Mr Marinis said this strategy “passes on the balance of the proceeds to the estate tax-free”.
Rising Tide senior financial planner Rebecca Pritchard said another super strategy used by wealthy Australians was super contribution splitting, which enabled people to transfer up to 85 per cent of a financial year’s concessional super contributions to their spouse.
Ms Pritchard said this strategy was “underused, particularly in professional couples”.
“The public story is fairness; the real story is tax efficiency,” she said. “Going into retirement with uneven balances is inefficient – you lose tax advantages and flexibility.”
Ms Pritchard said the carry-forward concessional contribution strategy – where people could claim tax deductions for extra contributions if they had not used up previous years’ concessional contributions caps – was “a massive wealth accelerator for high-income Australians right now”.
“If your balance is under $500,000 (the maximum threshold for making carry-forward contributions) and you’re on the top marginal tax rate, you’re hard pushed to find a better total return available,” she said.
“And finally, wealthy households pay for advice. They outsource complexity and follow a deliberate sequence, rather than dipping in and out of the system.”
Self-managed super
Australia has 653,000 self-managed superannuation funds, with 1.2 million members, and the average member balance is $881,000 – five times the overall average super balance.
However, evolving investment platforms and options beyond the SMSF space are making them less appealing to some wealthy people.
SMSFs are great for holding direct property investments, including business premises, inside their low-tax super environment, because this cannot be done through retail or industry super funds, but other investments such as direct shares, exchange-traded funds and managed funds can easily be held on a non-SMSF platform.
Ms Pritchard said most of her clients did not have an SMSF and “several who previously did are in the process of exiting”.
“There’s a persistent myth in Australia that you need an SMSF to be wealthy,” she said. “You don’t. SMSFs can be brilliant for the right person, but most people overestimate their relevance and underestimate the workload.”
Mr Marinis said he often tried to talk retirees out of SMSFs “because it becomes difficult to administer”.
He said they were popular years ago because owning shares and managed funds through retail super funds was expensive, but the costs today were similar. “I tend to wind up SMSFs rather than create new ones – when you get to your 60s and 70s it becomes an administrative burden.”
The looming $3m limit
Even though Treasurer Jim Chalmers watered down his plan to tax unrealised capital gains in super funds worth more than $3m, a higher tax burden still looms for wealthy people through the so-called Division 296 changes.
Mr Marinis said these rules, now scheduled to start in July 2026, would result in more wealthy super fund savers examining company structures, trust structures and insurance bonds as options to reduce tax.
“You’re not going to be tax-free, but you try to structure it,” he said.
“All of a sudden, if you’ve got multiple millions in super, you will have to look to restructure.
“Even though I’m a super nerd, if you have got more than $3m in super, you probably really need to consider reinvesting elsewhere, because if they’re going to start taxing it at 30c and 40c in the dollar, there’s better structures to hold your money than super, unfortunately, going forward.”
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