How to grow your super as a freelancer

by Rachel Smith
03 December 2022

Updated Dec 2022

No holiday pay and no super are definitely two downsides of freelancing. And chances are, you think there’s no way to grow your super as a freelancer – especially when your cash flow is so up and down, and you’re grateful just to be able to pay your bills each month.

I totally get it. Freelancers aren’t legally required to pay themselves super, and as a result a whopping 20 percent of self-employed people (yep, that’s us) have no super at all. Zero. Zip. Nada.

The scary thing is, financial experts say you’ll need around $545,000 as a single person to get you through retirement comfortably (and $640,000 as a couple). So ignoring your super is not so smart.

How CAN you grow your super?

I’m one of many freelancers who hit her 40s and started to quietly freak out about super. Mine has suffered drastically over the years – because I thought it would be smarter to put any spare money into my mortgage, or because I didn’t have any spare cash to throw at super at all.

But I’m onto it now and determined to grow that sucker. I don’t want to be eating baked beans on the daily in retirement (I really hate baked beans).

Here are some tips on how to get started, even if you look at your super balance and want to cry endless, hopeless tears.

Budget for it.

You can make up to $25,000 in concessional contributions to your super each year and claim it as a tax deduction. And, because your super is taxed at 15 percent (substantially lower than your marginal tax rate), it’s going to do far better for you financially if it’s sitting in your super account.

Make it a direct debit.

Some experts suggest throwing 10-15 percent of your income into super each month, or you could build up a lump sum in a high-interest account and transfer it quarterly. I’m not sure I could trust myself not to dip into that, so I’m doing it monthly. I know there may be some months I will only be able to chuck $100 towards my super. But keep on funnelling that little bit in – the magic of compound interest means it all helps.

Add in tax rebates and windfalls.

These are known as non-concessional contributions and are all the nice little lump sums you get that you promptly spend on an all-expenses-paid trip to Bali. I propose skipping Bali and sending that $3k tax rebate to your super. Or, if you receive an inheritance you weren’t expecting? Super. Got a heap of stuff people will pay good money for on Facebook Marketplace? Flog it and chuck the money into super. You get the idea.

Make the government cough up.

If you earn an adjusted taxable income up to $37,000, you may be eligible to receive a refund into your super fund of the tax paid on your concessional super contributions (up to $500).

You don’t need to apply for this – it’ll appear in your fund account automatically if you’re eligible and your fund has your tax file number (TFN).

Consider switching to a company.

If you already operate as a Pty Ltd, you’ll have to pay yourself the super guarantee (SG) which is set at a rate of 10.5 percent in 2022-23. This’ll gradually increase to 12 percent on 1 July 2025.

Creating a company so you’re forced to pay super may seem radical, but see my point further up about baked beans, etc.

Ask your partner to put money in your super.

Yep, spousal contributions are a thing and if your partner’s in a higher tax bracket, funnelling some $$$ into your super could mean they pay less tax. Plus, they’ll get warm fuzzies from helping plan for your future together (and a more comfortable retirement).

Research super funds.

I know, I know, it can make your eyes glaze over comparing super funds but it’s essential if you want to ensure the fund you’re in doesn’t have really high fees that will eat into your super balance. Similarly, some funds offer advice and the chance to choose types of investments so getting more into it could help you grow your super more quickly.

Charge more.

Not easy, I know, but it makes sense to raise your rates annually so you will have more money to funnel into your super. If you’re interested in learning more about rates, how to charge, what to charge and everything else to do with finances as a freelancer, check out Brook McCarthy’s mini masterclass on turbo-charging your money-making skills.

Realise you can bump it up later in life.

If you own property and know you’ll probably downsize later to a smaller home, you can contribute up to $300,000 to your super from the sale of your home – this can be a way to boost your nest egg closer to retirement.

Are you a freelancer quietly freaking out about your super – or have you been smart and put enough a heap away for retirement? We’d love to hear from you in the comments (anon or otherwise!)

* NB: Please check with your super fund or accountant in regards to what you’re eligible for and restrictions on making concessional and non-concessional contributions to your super.