June means the financial year is drawing to a close and it's a good opportunity to boost your super.
Let's dive into some good reasons to think about topping up your retirement accounts this month.
Why you should try to grow your super in June
There's a couple of arguments in favour of trying to grow your super. For one, you could be getting 'free money' from the Federal Government, depending on your income level.
The Aussie government will contribute up to $500 to your super fund when you boost your super by $1,000 on an after-tax basis.
To take advantage of this, you need to make sure you meet the eligibility requirements. This includes having a super balance under $1.6 million and a total income less than $38,564. You can also receive a progressively lower government contribution amount if your income is between $38,564 and $53,564.
This means you could potentially grow your super by a total of $1,500 in June. It's hard to beat a 50% instant return on investment, even if you won't reap the benefits until you reach the preservation age.
With the S&P/ASX 200 Index (ASX: XJO) falling lower in 2020, now could be a good time to get some superannuation units at a discount.
There's also the potential to contribute on a before-tax basis. If you contribute before 30 June, you could lower your taxable income in FY20.
For instance, if you earned $50,000 during the year and have managed to save $13,000. You could potentially boost your super by $13,000, claim the tax deduction and make your taxable income $37,000 for the year.
That means your marginal tax rate would fall from 32.5 cents to just 19 cents. All of that while giving your retirement funds a big boost.
What's the catch?
Of course, contributing additional funds to superannuation is not for everyone. There are always the potential regulatory risks (i.e. government changes) and the fact that your money is locked away for a long time.
However, if you're looking for simple ways to reduce your tax this year, growing your super is a straight forward way to do it.
