Five ways to fix the biggest financial mistake Aussies make

Australians are feeling more positive about their long-term financial future this year than they did a year ago, according to research CFS conducted into financial literacy and planning for the long-term future. 

In the three months to September, 44% of Australians said they were feeling prepared for when they eventually stop working, up from 37% a year earlier. 

However, almost two in five (38%) Australians say they are not on track to meet their long-term financial goals when they eventually stop working. In addition, 35% say they aren’t confident they will ever reach those goals.

What’s the number one reason the majority of Australians fail to reach their long-term financial objectives?

In fact, almost three in five respondents said this was a reason they got off-track, followed by failing to plan for when they stop working, nominated by 39% of Australians, and not knowing how much they needed to save, named by 37%.

The good news is there are some achievable, practical steps you can take to help get your finances back on track for the long term:

Having some idea of how much you might need to save is the first step to getting your long-term financial goals back on track.

You can use our calculator to estimate how much you might need in your super, taking into account your goals, your current super balance, your income, and how long you expect to continue working. 

The government’s Moneysmart website also has some great calculators to help you set some savings goals, accounting for the benefits of compound interest.

And it offers ideas to help you reduce your expenditure and debt, if needed.

Your employer pays the equivalent of 11.5% (increasing to 12% from 1 July 2025) of your pre-tax salary or wages in compulsory super contributions into your super fund to help you save for the long term. 

Salary sacrificing a bit extra from your pre-tax pay into your super is a great way to make up some ground if you’re looking to catch up on your long-term saving goals. 

You can arrange for your employer to make additional super contributions on your behalf. These salary sacrifice contributions are generally only taxed at 15% (unless you earn over $250,000 a year), which makes them a very tax-effective way of saving. 

Salary sacrifice is a recurring arrangement, so your employer will keep making the additional contributions until you ask them to stop. It can be a great way of saving money for the long term, potentially without noticing it as much. 

For example, one strategy might be to revisit the government’s recent Stage 3 tax cuts and ask your employer to salary sacrifice any additional take-home pay into your super. 

Keep in mind that both your compulsory employer contributions and your salary sacrifice contributions count towards the annual concessional contribution cap of $30,000. Any contributions that you make and claim a tax deduction for are also included in this cap. 

Salary sacrificing and making personal contributions you claim a tax deduction for both reduce your taxable income, so if that drops you into a lower tax bracket, it may have an additional benefit.

There are also other types of contributions you can make to your super.  
 

You may be entitled to contribute more than $30,000 at the 15% tax rate using what are known as carry-forward contributions if you have paid less than your cap limit into super in any of the previous five financial years.

This may be particularly helpful if you have spent some time out of the workforce, for example to care for a relative or due to ill-health.

However, this only applies if you had a total superannuation balance of less than $500,000 on 30 June of the previous financial year.

For this strategy to be effective, you also need to have sufficient taxable income†.

Even if you’re older, there are options available to help you get your finances back on track for the long term, such as when you reduce your working hours or stop working altogether. These include:

• Downsizer contribution: From the age of 55, you may be eligible to make a downsizer contribution of up to $300,000 to your super using the proceeds from the sale of your home. So if you have decided to sell up and downsize into a smaller more manageable property, this could provide an opportunity to top up your super tax-free, and you can also withdraw it tax-free later on. Both members of a couple can take advantage of this, making a total of $600,000 that can be contributed into super. Keep in mind the Association of Superannuation Funds of Australia recommends a super balance of $690,000 per couple or $595,000 for a single person^, so depending on your goals, this option, if it makes sense for you, could get you close.  

• Transition to retirement: If you’ve turned 60 but haven’t yet retired, it may be worth considering a TTR pension, which enables you to work full-time, withdraw up to 10% of your TTR pension account as a tax-free income stream, and continue to contribute to your super. TTR income stream payments can provide you with more cashflow to make additional contributions to super like salary sacrifice or personal contributions. This can boost your super tax-effectively if the contributions are higher than what you’re drawing from the pension. 

Financial advice is like a tide that floats all boats. Our research* shows that people who have received financial advice feel notably more confident about managing their finances, having enough money when they stop working, and reaching their financial goals. 

For ongoing financial advice, it may be worth seeing a financial adviser. 

It’s also worth noting that fees you pay for financial advice may be tax deductible, particularly if they relate to managing your tax (such as salary sacrifice) or income-producing investments held outside your super. If the advice relates to your super, you can also deduct the cost from your super balance.

If your needs are relatively straightforward, other advice options are also available.

If your advice needs are related to a particular issue, you can seek one-off financial advice on a specific topic, such as managing debt, or maximising your super.

CFS also offers personalised, affordable, digital financial advice through Otivo, or you can book a call with our guidance centre for general advice.