At some stage in your working life, you may find yourself taking a break from work. Maybe it’s to start a family or to travel, or it may be for more unfortunate reasons, such as you or a family member becoming ill.
While you’re off work, you may not have any employer contributions being paid into your super account. And if you are taking a few years off, this can have quite an impact on your retirement nest egg. If you are working part-time at all during this period, then your employer will only pay money into your super account if you’re earning more than $450 a month.
Research by the Association of Superannuation Funds of Australia (ASFA) shows that a break of three years out of the paid labour force, five years into your career, could lead to an eventual retirement payout being approximately $27,000 less than it otherwise would have been.
Therefore it’s important that you don’t neglect your retirement savings during this time and look at ways to keep building on super.
Spousal contributions are where your spouse makes a contribution to your super account and they receive an income tax rebate. It’s a great way to keep growing your super while you’re taking time off. Click here for more information on spousal contributions.
Don’t forget about the government co-contribution scheme. You can make an after-tax contribution of $1,000 a year to your super account and the government will match you dollar for dollar, provided you meet the eligibility requirements. If you’re taking a few years off, it’s certainly something to consider. Super Guru has more information in the government co-contribution scheme in the Building Your Super section.
But remember, you can always put extra into your super account. Give your fund a call to see what options are available to you to make extra contributions.
It’s important to keep building on your nest egg even if you’re not working. Consider your full financial situation and make a plan to ensure you have some money going into your retirement savings during this period. Give your fund a call to discuss your options for keeping your retirement savings on track, or speak to a financial planner.
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