Superannuation Strategies for Couples: Building Retirement Together

For many, superannuation is one of the biggest assets they’ll rely on in retirement. While it’s common to think of super as an individual thing, couples may not realise how powerful it can be when managed as a team. If you and your partner want to build a strong and secure retirement, looking at your superannuation balances together can make a real difference.

Rather than thinking about my super and your super, many couples benefit from a mindset shift towards our retirement. After all, most couples plan to retire together, travel together, and enjoy their later years side by side. So why not plan your super strategies the same way.

In this blog, we’ll take a look at why working together on superannuation is valuable, what strategies couples consider, and why professional advice can help navigate the rules and opportunities available.

Why Superannuation Planning as a Couple Matters

Superannuation is a tax-effective structure designed for long-term retirement planning that grows throughout your working life. It’s important to consider that many rules around super are set up for individuals, not couples.

This can sometimes create challenges especially when one partner has a high balance and the other has a much lower one. For example:

• Transfer Balance Cap: This is the limit on how much you can transfer into a retirement income stream. At the moment, it sits at $2 million per person. That sounds generous, but what if one partner has $3 million in super while the other only has $200,000. This means a couple with uneven balances might pay more tax in retirement than a couple with equal balances.

• New Super Tax on Large Balances: The government has also proposed a new tax for super balances over $3 million. While this won’t affect every couple, it could become a consideration for those who’ve built significant wealth. Again, balancing super across both partners may help manage exposure to such taxes in the future.

Because of these rules, working together to even out balances and plan as a couple can help protect retirement savings from unnecessary tax and make retirement income more efficient.

Why Do Super Balances Differ Between Couples?

It’s common for one partner to have a larger super balance than the other. It’s something financial planners see regularly.

Some of the main reasons include:

• Income differences: One partner may earn a higher income over their career, leading to higher contributions

• Career breaks: Many people take time out of the workforce for study, travel, or personal reasons

• Child-rearing responsibilities: Often, one person steps back from full-time work to raise children, which can slow their super growth

• Part-time or casual work: Lower working hours usually mean lower contributions

• Gender pay gap: Women on average earn less than men in Australia, leading to smaller balances over time

This means that, in many households, women often retire with significantly less super than men. Looking at superannuation as a couple not just as individuals can help address these imbalances over time.

Superannuation Strategies for Couples

The superannuation structure allows for different strategies that can provide couples with options to balance their accounts.

1. Contribution Splitting

Contribution splitting is exactly what it sounds like, it allows one partner to transfer part of their before-tax contributions into their spouse’s super account.

This can help even out super balances over time.

2. Spousal Contributions

A spousal contribution is when one partner contributes directly to the other partner’s super fund. This is often used when one partner has a much lower income, or no income at all, for a period of time.

There can sometimes be tax offsets available for the contributing partner, but more importantly, it helps grow the lower-balance partner’s retirement savings.

3. Recontribution Strategy

A recontribution strategy is a little more technical, but in simple terms, it involves withdrawing some super (if eligible) and then recontributing it back into super (if eligible).

Why would someone do this? Often it’s used to change the tax components inside super and improve the eventual tax position for beneficiaries. For couples, it can also be used to help even out balances by withdrawing from one partner’s account and recontributing into the other’s (if eligible).

4. Self-Managed Super Funds (SMSF)

For some couples, managing super together in a Self-Managed Super Fund (SMSF) can make sense. With an SMSF, members can pool their super to invest collectively. For couples, this often means greater control over investment choices and the ability to manage funds more flexibly.

Of course, SMSFs come with responsibilities, costs, and regulatory obligations, so they’re not for everyone. But for couples wanting to actively manage their retirement wealth together, it may be a consideration.

5. Downsizer Contribution

The downsizer contribution allows eligible Australians to contribute into super from the proceeds of selling their home.

For couples approaching retirement, this can be a powerful way to boost super balances later in life. It also means both partners can benefit equally from the contribution, even if their super balances have been unequal during their working years.

The Benefits of Balancing Super as a Couple

So why put in the effort to balance super between a couple.

Here are some of the key benefits:

• Tax efficiency in retirement: By making sure both partners have healthy balances, you can make full use of the tax-free income limits available to each person

• Managing caps and limits: Avoid wasting one partner’s unused transfer balance cap by spreading savings more evenly

• Flexibility: Having two strong super accounts means more options when it comes to retirement planning, estate planning, and income strategies

• Protection against future changes: With potential large balance tax changes having balances spread more evenly could help reduce exposure

• Security: Life is unpredictable. If something happens to one partner, the other benefits from having their own super in place, rather than relying entirely on one account

Women and Superannuation: Why This Matters Even More

Superannuation balance inequality is an issue in Australia. Women, on average, retire with less super than men. The reasons often come back to lower earnings, part-time work, and career breaks to raise children.

This imbalance can have a real impact on retirement security. Working together as a couple to balance super isn’t just about tax efficiency it’s also about fairness and financial independence.

It is particularly important in ensuring that women don’t enter retirement at a disadvantage after years of unpaid work and caring responsibilities.

The Role of Financial Advice

Superannuation strategies can get complicated. There are rules for contribution limits, eligibility, and timing that can be tricky to navigate. That’s where working with a financial advisor can make a real difference.

An advisor can help couples:

• Understand their current balances and how they compare

• Identify opportunities to even out super over time

• Explain the rules in simple terms, without jargon

• Map out a joint retirement plan that takes both partners into account

For couples with big discrepancies between balances particularly where one partner has had time out of the workforce it can be reassuring to know there are strategies to help close the gap.

Superannuation is one of the most powerful tools Australians have to fund their retirement. While it’s set up mostly as an individual system, couples who work together can unlock benefits, reduce tax, and create more balanced financial security.

From contribution splitting to downsizer contributions, there are several strategies available that can help couples manage their super as a team. And with rules like the transfer balance cap and new taxes on large balances, having even super accounts can make a difference.

Ultimately, planning superannuation together is about building a joint retirement future one where both partners have confidence, independence, and security.

If you and your partner haven’t looked at your super balances together, now might be the perfect time to start the conversation. And if it all feels a bit complex, speaking with a financial advisor can help you navigate the options and put a plan in place that works for both of you.

Disclosure

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