Maximising Your Superannuation

Maximising Your Superannuation After 55

Superannuation is often your biggest retirement asset. If you’re over 55, the next few years could be your most powerful time to grow it before you retire. Let’s explore how.

Why Superannuation Matters More Than Ever in Your Late 50s and 60s

For many Australians, superannuation is the single most important source of income in retirement — sometimes even more valuable than the family home. Why? Because super is designed specifically to fund your lifestyle when you stop working, and it enjoys tax advantages you won’t find in most other investments.

By the time you reach your late 50s, you’ve probably been contributing to super for decades through employer contributions. However, the final 5–10 years before retirement can be when your super grows the fastest. This is thanks to a combination of higher earning potential, fewer family expenses, and the power of compounding returns.

It’s never too late to improve your retirement position. Whether you’re behind on your savings or simply want to ensure a more comfortable lifestyle, making the most of your super now can make a huge difference later.

Understanding the Rules for Over-55s

The Australian superannuation system has clear rules about contributions, withdrawals, and taxation. Knowing these rules can help you avoid costly mistakes and take full advantage of available opportunities.

Preservation Age

Your preservation age is the earliest age at which you can access your super, and it depends on your date of birth:

Date of Birth	Preservation Age
Before 1 July 1960	55
1 July 1960 – 30 June 1961	56
1 July 1961 – 30 June 1962	57
1 July 1962 – 30 June 1963	58
1 July 1963 – 30 June 1964	59
After 30 June 1964	60

Reaching preservation age is just one factor — you also need to meet a condition of release before you can withdraw super (such as retirement or starting a transition to retirement income stream).

Contribution Caps

Contribution limits are important because exceeding them can result in extra tax:

• Concessional contributions cap: $27,500 per year (before tax contributions such as employer SG, salary sacrifice, or personal deductible contributions).
• Non-concessional contributions cap: $120,000 per year (after-tax contributions), or up to $360,000 under the bring-forward rule if you’re eligible.

Caps apply across all your super funds combined, so you need to track contributions carefully.

Work Test Changes

From 1 July 2022, people aged 67 to 74 no longer need to meet the ‘work test’ to make or receive non-concessional contributions and salary sacrifice contributions. However, you must still meet the work test to claim a tax deduction for personal contributions.

Top Strategies to Grow Your Super After 55

Let’s dive into the most effective ways to boost your super balance before retirement. You don’t need to do all of them — even choosing one or two can make a real difference.

1. Salary Sacrifice

Salary Sacrifice: Boosting Your Super Before You Retire

If you’re aged 55 or over, one of the most effective and tax-smart ways to grow your superannuation before retirement is through salary sacrifice. It’s a strategy that allows you to redirect part of your pre-tax income straight into your super fund instead of receiving it as regular salary. This not only gives your super balance a healthy boost but can also reduce the amount of income tax you pay. The idea is simple – you take advantage of super’s lower tax rate on contributions (generally 15%) instead of your personal marginal tax rate, which could be much higher.

How Salary Sacrifice Works

Salary sacrifice is an arrangement between you and your employer where you agree to “sacrifice” a portion of your salary in exchange for your employer contributing that amount directly to your super. For example, if you earn $80,000 a year and decide to salary sacrifice $10,000, your taxable income drops to $70,000. The $10,000 goes into your super fund as a concessional contribution, taxed at just 15% inside the fund instead of your higher marginal rate – which could be up to 32.5%, 37%, or even 45% depending on your income.

Why It’s Particularly Attractive for Over 55s

Once you’re over 55 (and especially over 60), retirement may be just around the corner, so maximising contributions while you can is crucial. Salary sacrificing during these years can be a real game-changer because you’re likely at your peak earning stage – and those extra contributions will have less time to grow but can still make a substantial difference to your final balance. Plus, if you’re 60 or over and later decide to withdraw from your super, your withdrawals are generally tax-free.

Understanding Contribution Caps

Before rushing in, it’s important to know the annual contribution caps. For concessional (pre-tax) contributions, which include your employer’s compulsory Super Guarantee (SG) payments and any salary sacrifice amounts, the cap is currently $27,500 per financial year (this figure is subject to government changes). Go over this cap, and you could be hit with extra tax. If you haven’t used your full concessional cap in previous years, you might also be eligible for the carry-forward rule, which lets you contribute more than the annual limit without penalty – as long as your total super balance is under $500,000.

The Tax Benefits in Action

Let’s take an example. Imagine you earn $90,000 per year and you decide to salary sacrifice $15,000. Normally, that $15,000 would be taxed at your marginal rate of 34.5% (including Medicare Levy), costing you around $5,175 in tax. But by salary sacrificing it into super, it’s taxed at just 15%, which is $2,250. That’s a tax saving of around $2,925 – and your super gets a big injection. Over a few years, that saving (plus the investment growth inside your super) can add up to tens of thousands more for your retirement.

Pairing Salary Sacrifice with Transition to Retirement (TTR) Strategies

For those over preservation age (currently between 55 and 60 depending on your birth year), you might also consider pairing salary sacrifice with a Transition to Retirement Income Stream (TTR). This strategy can allow you to reduce your working hours, draw a small pension from your super, and keep salary sacrificing at the same time – effectively maintaining your income while still boosting your super balance.

What to Watch Out For

• Check your employer’s policies: Some employers limit how much of your salary can be sacrificed or may require a formal agreement in advance.
• Don’t exceed the cap: Keep track of both your employer’s SG contributions and your own salary sacrifice amounts so you don’t go over the concessional cap.
• Review your cash flow: Remember that salary sacrifice reduces your take-home pay, so make sure you can comfortably cover your living expenses.
• Confirm with your super fund: Ensure your fund accepts salary sacrifice contributions and check any processing times.

Salary sacrifice is one of the most powerful tools available to Australians over 55 who want to maximise their super before retirement. By taking advantage of the lower tax rates on super contributions, you can give your retirement savings a meaningful boost while reducing the amount of tax you pay today. It’s a win-win – more money for your future, less tax right now.

As with any financial strategy, it’s worth speaking to a licensed financial adviser or using a reputable superannuation calculator to figure out exactly how much you can salary sacrifice without impacting your current lifestyle. The earlier you start, the bigger the potential benefit – but even if retirement is only a few years away, salary sacrificing could make a significant difference to your retirement comfort.

2. Personal Deductible Contributions

Not everyone can use salary sacrifice. You might be self-employed, working as a contractor, freelancing, or between jobs, which means you don’t have an employer making regular super contributions on your behalf. The good news is you can still take advantage of the same tax benefits through what’s called a personal deductible contribution. This is where you put some of your own after-tax money into your super fund and then claim it as a tax deduction when you lodge your income tax return. The end result is very similar to salary sacrifice — you pay less tax and your super balance grows faster.

How Personal Deductible Contributions Work

Personal deductible contributions are made from your own savings or income after you’ve received it. For example, you might transfer $10,000 from your personal bank account into your super fund. Later, when completing your tax return, you tell the Australian Taxation Office (ATO) that you want to claim this contribution as a deduction. The contribution is then treated as a concessional contribution, taxed at the super fund rate of 15% instead of your higher marginal rate. This difference in tax rates can save you thousands each year while helping you build your retirement savings.

Who Can Make These Contributions?

Anyone under the age of 75 can make personal deductible contributions, provided they meet certain eligibility rules. If you’re aged 67 to 74, you’ll generally need to meet the work test — which means working at least 40 hours over a consecutive 30-day period during the financial year — unless you qualify for the work test exemption. Younger Australians, sole traders, and those with irregular work patterns can also use this strategy effectively. It’s particularly popular with small business owners who want to top up their super when business cash flow allows.

Contribution Caps to Keep in Mind

Personal deductible contributions count towards your annual concessional contributions cap, which is currently $27,500 per financial year. This cap includes any other concessional contributions you might receive, such as the Super Guarantee (SG) from an employer if you have part-time work, or any salary sacrifice amounts. If you go over the cap, you could face extra tax charges, so it’s important to plan your contributions carefully.

If you haven’t used your full concessional cap in previous years, you may be able to take advantage of the carry-forward rule. This lets you “catch up” on unused cap amounts for up to five years, provided your total super balance is less than $500,000 at the previous 30 June. This can be especially useful for people who have had fluctuating income and can afford to make larger contributions in better years.

The Step-by-Step Process

• Make the after-tax contribution into your super account before 30 June of the financial year.
• Complete and submit a Notice of Intent to Claim or Vary a Deduction form to your super fund before lodging your tax return.
• Receive an acknowledgement from your super fund confirming they’ve recorded it as a concessional contribution.
• Include the deduction when lodging your income tax return to get the tax benefit.

Tax Savings in Action

Let’s say you earn $100,000 and decide to contribute $20,000 of your own savings into super and claim it as a deduction. Normally, that $20,000 would be taxed at your marginal rate of 39% (including Medicare Levy), costing you $7,800 in tax. But as a concessional contribution, it’s taxed at just 15% ($3,000) inside your super fund. That’s a tax saving of $4,800, plus you’ve boosted your retirement savings by the full $20,000.

• Make sure you lodge your Notice of Intent form before you submit your tax return, or you may lose the ability to claim the deduction.
• Double-check the timing — contributions need to reach your super fund before 30 June to count for that financial year.
• Work with a tax agent or financial adviser if you’re unsure about caps, eligibility, or how much you can contribute without affecting your cash flow.

Personal deductible contributions are a flexible and powerful way to grow your super, especially for self-employed Australians or those without regular employer contributions. By taking advantage of super’s low tax environment, you can significantly increase your retirement savings while reducing the tax you pay today.

3. Catch-Up Concessional Contributions

If your total super balance is under $500,000, you can carry forward unused concessional contribution caps from the last five years and contribute more in a later year. This is handy if you’ve had a windfall, sold an asset, or received an inheritance.

4. Downsizer Contribution

If you sell your main residence and you’re aged 55 or older, you can put up to $300,000 from the sale into super without affecting your contribution caps. For couples, that’s $600,000 combined. This can be a powerful way to turn home equity into retirement income.

5. Non-Concessional Contributions & Bring-Forward Rule

These are after-tax contributions that can significantly boost your balance if you have spare cash. The bring-forward rule allows eligible people to contribute three years’ worth in one go — up to $360,000.

6. Spouse Contributions & Contribution Splitting

If one spouse has a much smaller super balance, consider contributing to their account to balance things out. You may even get a tax offset of up to $540. Splitting concessional contributions can also help with future tax and Centrelink planning.

7. Government Co-Contribution

If your income is under $58,445 and you make a personal after-tax contribution, the government may add up to $500 to your super. It’s free money — don’t leave it on the table.

8. Investment Review & Asset Allocation

Don’t just focus on contributions — review how your money is invested. Too conservative, and your balance may not grow enough; too aggressive, and you risk losing capital just before retirement. A balanced or growth mix is often recommended for people in their late 50s.

9. Consolidating Your Super Funds

Multiple accounts mean multiple fees and insurance premiums. Consolidating can save money and make it easier to manage. Just check any insurance benefits before switching.

10. Fee Audit

High fees can quietly eat away at your super over time. Compare your fund’s admin and investment fees with similar options — even a small reduction can add thousands to your retirement balance over the years.

Tax Advantages of Superannuation

Superannuation is not just a savings account — it’s a tax-effective investment vehicle.

• Earnings inside super are taxed at just 15% (or 10% for long-term capital gains) compared to your marginal tax rate outside super.
• Once you convert your super into a retirement income stream, earnings may be completely tax-free.
• Withdrawals after age 60 are generally tax-free if you meet a condition of release.

Maximising your contributions before retirement keeps more of your money in this low-tax environment, giving you a better chance of maintaining your lifestyle later.

Transition to Retirement (TTR) Strategies

Reaching your preservation age opens the door to a Transition to Retirement pension. This lets you draw down a limited amount from your super while still working. You can use it to reduce your working hours without cutting your income, or to boost your super through a ‘recycling’ strategy — salary sacrificing while replacing the reduced income with your TTR pension.

This can be complex, so professional advice is recommended to ensure it benefits you.

Common Mistakes to Avoid After 55

• Withdrawing super too soon and losing compounding growth.
• Exceeding contribution caps and paying extra tax.
• Neglecting to review investment performance and fees.
• Keeping insurance you don’t need inside super (or losing valuable cover without realising).
• Not using available concessions like catch-up or downsizer contributions.

When to Seek Professional Advice

The final decade before retirement is your last and best opportunity to build a strong super balance. Because the rules are complex, getting advice can pay for itself many times over. A licensed financial adviser can help you:

• Maximise contributions within the caps
• Structure investments to suit your risk tolerance
• Plan withdrawals to minimise tax
• Coordinate super with other assets and Centrelink benefits

Final Thoughts

Maximising your superannuation after 55 is about making smart choices — and making them now. Whether it’s boosting contributions, rethinking your investment mix, or using special rules like downsizer contributions, every step can have a lasting impact.

Think of super as the engine that will power your lifestyle in retirement. Give it the fuel it needs now, and it can take you further than you think possible.