When you take the next step in your career, it is a good opportunity to review that your super matches your retirement goals.
Reviewing your financial plan when you change jobs.
There is a lot of excitement and uncertainty that can come from a job change. A promotion can bring new responsibilities. A new employer means new relationships. Taking a career break can be stressful.
If you experience big changes at work, here are a few things you can do to ensure your super is on track:
Get a raise
Having more take-home pay is great however there are ways that you can re-invest that money to make it work harder for you while reducing your tax burden.
A pay increase will give you more flexibility in your budget, but while the total may seem great, an extra $10,000 per year averages out to about $150 per week after taxes. In some cases, the raise may also push you into a higher tax bracket.
It’s important to have a plan for how to make the most of the new money. Making voluntary pre-tax (or concessional) contributions to your super like salary sacrifice can result in a lower tax burden – most people pay 15% for concessional contributions to super, which can be lower than their marginal rate – and it can also reduce your assessable income, reducing your tax burden.
You can also take this time to review your super investments. Even if you don’t salary sacrifice, the raise will mean more money going into your super account through the superannuation guarantee. Review those investments to ensure they’re in line with your needs.
Taking a new job
Making a job change means you’ll likely get asked the question about how you want your super set up. Take this opportunity to review any and all super accounts that you have – consolidating will likely save you a significant amount of money in fees – keeping more of your money in your account, working for you.
Also look at the performance of your investments – are they helping you stay on the path to your retirement goals?
Taking time off of work
If you’re reducing your hours or taking leave to be a primary caregiver, taking a study break or to take care of the kids, there is an inherent impact to your family’s finances. If you’re considering taking an extended amount of time out of the workforce, our financial advice team can advise you on the best ways to approach it. From budgeting to benefits, there are many areas to consider when taking time out from work.
While taking care of family is important, you can often do it without mortgaging your future. There are government schemes available to support spousal contributions to super and low income tax offsets that can return a portion of taxes paid directly to your super so that you can continue to grow your retirement balance even if you’re not working a full-time job.
Thinking about making the transition to retirement? Want to be your own boss? Here are some other things to consider about life changes and what they might mean to your super.