10 super tips for high income earners

On the top tax rate, you lose 47 cents of every extra dollar you earn. Inside super, contributions are generally taxed at 15%, or 30% for high earners.

Then, once you retire after 60, the income can be tax free. No other structure comes close.

Here are the ten tips I give clients most often.

Contributions

1. Use your full concessional cap

Your concessional cap is $30K a year. That includes your employer’s super guarantee, now 12% of your salary. On a big salary, your employer may already be close to the cap, so check before you salary sacrifice.

2. Catch up on unused cap

If your total super balance was under $500K on 30 June, you can use unused concessional cap from the past five years. It is a great way to cut tax in a year with a big bonus or vest.

3. Add after tax money

You can add up to $120K a year of after tax money, or $360K at once using the bring forward rule, if your balance is under the limits. RSU proceeds and bonuses are a common source.

4. Even up with your partner

Splitting contributions to a lower balance partner, or making spouse contributions, can double the amount you can later hold in tax free retirement accounts.

5. Know about Division 293

If your income plus concessional contributions is over $250K, you pay an extra 15% on those contributions. Super is still worth it at 30%, compared with 47% outside.

Investments and fees

6. Pick an investment option on purpose

Many people are still in the default option they joined with 15 years ago. If retirement is 10 or more years away, a growth focused option may suit you better. Review it.

7. Check your fees

A fee difference of 0.5% a year sounds small. Over 20 years on a $1M balance, it can cost you hundreds of thousands of dollars.

8. Consolidate old funds

Tech careers mean lots of job changes. Multiple funds usually means multiple sets of fees and insurance premiums.

Protection and planning

9. Review the insurance inside your super

Default cover is often too low for a high earner, or doubled up across funds. See my guide to personal insurance advice.

10. Nominate your beneficiaries

Super doesn’t automatically follow your will. A valid binding nomination makes sure it goes where you intend.

Super is only half the plan

You can’t generally access super until 60. If you want work to be optional earlier, you also need investments outside super. I explain how in how to retire early in Australia.

For a full review of your super, see my superannuation advice service or book a call below.