Could you really live on less than $14,000* a year?

That’s about what you’d receive on the single age pension. Think about what you earn now. How much of it’s left over at the end of each year?

It's generally accepted that retired singles need around $36,00 a year to live comfortably, and couples need around $48,000**.  That's assuming you own your home when you retire.

This might make you wonder how you’ll afford the life you want when you stop work.

The answer could be as simple as adding a little extra contributions to your superannuation account now. The earlier you start, the more compound interest can boost your super fund balance.

That can mean more money when you retire.

* This refers to the approximate maximum single age pension as at July 2007.

** Source Association of Superannuation Funds of Australia Ltd as at June 2007. Visit www.asfa.asn.au. Please note the above figures are based on the average national weekly budget for a retired single femal with a comfortable lifestyle as at June 2007.

Take a look into the future: what do you imagine your retirement will be like? Perhaps you dream of jetsetting overseas, exploring Australia or kicking back and enjoying a lifestyle you didn't have time for while you were working.

If that sounds like you, it's generally agreed you may want around 60-80% of your pre-retirement salary when you retire. The compulsory contributions your employer makes may not provide that amount.

The table below shows the after-tax percentage of salary you may need to contribute to generate retirement income equal to 75% of pre-retirement earnings.

Assumptions: No prior superannuation savings - Inflation rate of 3% pa - Fund earning rate of 3.25% above inflation - Inflation indexed retirement income paid for 25 years - Employer contributions at Superannuation Guarantee Levels - Tax rate of the fund is 15%. Data Source: Industry Fund Services Pty Ltd 

Making your own voluntary contributions now means you may have more money to do what you want later in life. Even $10 a week can will make a difference and the earlier you start, the more you may gain from compound interest.

For example, if you’re 20 years old, an extra weekly contribution starting at $10 can add up to an extra $64,347 when you retire at age 65. An extra $20 adds up to $128,694. (This assumes your after-tax contributions increase at the rate of inflation - 3%, and you earn 6.25% interest each year). If you make after-tax contributions to your super, you may even be eligible for a government super co-contribution.

See the effect extra contributions may have on your super: use our quick Super Calculator.

Limits on concessional contributions

A limit of $50,000 per year (indexed) generally applies to concessional contributions (usually those made by your employer including salary sacrifice).  A transitional period applies for people aged 50 and over between 1 July 2007 and 30 June 2012, who can have concessional contributions of up to $100,000 per year. Contributions in excess of this cap will be taxed at the top marginal tax rate (plus Medicare Levy) currently 46.5%.

Limits on non-concessional contributions

Personal contributions that are not tax deductible (known as non-concessional) are limited to $150,000 per year.  People under age 65 can bring forward two years of contributions and make a larger contribution of $450,000.  Your super fund can't accept contributions over that cap.  If you make contributions over the cap because you contribute to more than one fund, any excess contributions will be taxed at the top marginal rate (plus Medicare Levy) currently 46.5%.

You can fund further information on contribution limits at www.ato.gov.au/super

Some other super funds charge you to make extra contributions, but HESTA won't charge you a cent! And it’s simple to make your extra contributions whenever you like (subject to government regulation).

Just choose the payment option that suits you best:

If you'd like to contribute $20 or more per month to your super, HESTA can help you organise a Direct Debit from your bank account.

With a HESTA Member Contribution Deposit Book you can make extra payments whenever you want to (subject to Government regulations).

Ask if your employer will make deductions from your after-tax pay. If they agree, all you need to do is fill in an authorisation form.

Visit Member Online for HESTA’s biller code and your reference number (refer to your Member Card) or free call 1800 813 327.

Some employers offer the option of salary sacrifice, an arrangement between you and your employer where you consent to reduce your gross salary by a nominated amount, and your employer uses this amount to increase your superannuation contributions. You’ll not only enjoy the benefits of extra contributions, you may also reduce the amount of tax you pay.

And to make it easier for you, your employer can send the contributions directly to HESTA on your behalf.

Check out our Salary Sacrifice/Co-contributions Calculator.  Also see the ATO website for information about making salary sacrifice effective.  You should consider seeking financial advice before entering into a salary sacrifice arrangement to compare how these may work. 

Need more information? Read our Topping up your super brochure.