Superannuation/Salary Sacrifice

[Angus Young]

Anyone throw extra money into their Super?

If so has it been worthwhile as opposed to other investment options etc etc

 

[ash_1050]

I'm smashing through a stack of paid overtime at the moment so I'm salary sacrificing an additional 13% into super to help mitigate the tax bill. Instead of being taxed at 37 cents pre-tax super is taxed at 15 cents which means I'm 22 cents per dollar sacrificed better off straight off the bat. With super returns going gangbusters at the moment and compound interest factored in it means you're much better off down the line when you retire, assuming you make it that far.

The only downside is it's locked into your super until you hit your retirement age and it's potentially subject to any 'superannuation taxes' down the line should the government look to implement something. Overall if you can spare the cash it's a no brainer for helping to set yourself up later on in life.

 

[burge13]

I'm smashing through a stack of paid overtime at the moment so I'm salary sacrificing an additional 13% into super to help mitigate the tax bill. Instead of being taxed at 37 cents pre-tax super is taxed at 15 cents which means I'm 22 cents per dollar sacrificed better off straight off the bat. With super returns going gangbusters at the moment and compound interest factored in it means you're much better off down the line when you retire, assuming you make it that far.

The only downside is it's locked into your super until you hit your retirement age and it's potentially subject to any 'superannuation taxes' down the line should the government look to implement something. Overall if you can spare the cash it's a no brainer for helping to set yourself up later on in life.

I've put 3% extra into super since I started work 12 years ago. Can't help but feel dollar-cost averaging that money into ETF or something would be smarter? Similar returns but the money is actually accessible when I need it, not 35ish years from now...

IF (big if) it worked out to be similar returns and I grew the pot to be the same as my super fund is currently I could go to 4 days work per week with the earnings in this fund making up the difference. Now sure how this would actually work in practicality however

The other thing is using the money to pay down your mortgage, grow equity and use that. Real estate returns beat the stock market don't they? Rental income on a property bought with this money + rise in house prices should far exceed Super.

 

[ash_1050]

I've put 3% extra into super since I started work 12 years ago. Can't help but feel dollar-cost averaging that money into ETF or something would be smarter? Similar returns but the money is actually accessible when I need it, not 35ish years from now...

IF (big if) it worked out to be similar returns and I grew the pot to be the same as my super fund is currently I could go to 4 days work per week with the earnings in this fund making up the difference. Now sure how this would actually work in practicality however

The other thing is using the money to pay down your mortgage, grow equity and use that. Real estate returns beat the stock market don't they? Rental income on a property bought with this money + rise in house prices should far exceed Super.

All reasonable points. I'm looking to buy a place in April so no mortgage at the moment. Already putting cash into shares as well rather than everything into pre-tax super and once the overtime dries up I'll drop it back to my normal 4% pre-tax super contribution. Diversifying and having a bit of everything is the way to go and it sounds like you're doing it pretty well already.

 

[burge13]

All reasonable points. I'm looking to buy a place in April so no mortgage at the moment. Already putting cash into shares as well rather than everything into pre-tax super and once the overtime dries up I'll drop it back to my normal 4% pre-tax super contribution. Diversifying and having a bit of everything is the way to go and it sounds like you're doing it pretty well already.

I'm not at all sadly; I know next to nought about shares or the stock market. I was asking as I don't know and figured you had more knowledge going from your initial reply.

I only have my house (live in, bought 8 years ago) and my super so not really diversified

Looking at my super statement and seeing how it's gone up every month gave me the idea that investing in shares rather than super would give me the $ now rather than waiting but I don't know anywhere near enough to pull the trigger on that. There's probably also tax considerations and other complexities making it more difficult than I figure it should be

 

[ash_1050]

I'm not at all sadly; I know next to nought about shares or the stock market. I was asking as I don't know and figured you had more knowledge going from your initial reply.

I only have my house (live in, bought 8 years ago) and my super so not really diversified

Looking at my super statement and seeing how it's gone up every month gave me the idea that investing in shares rather than super would give me the $ now rather than waiting but I don't know anywhere near enough to pull the trigger on that. There's probably also tax considerations and other complexities making it more difficult than I figure it should be

It ultimately comes down to whether you want access to the cash at any point before retirement or if you're happy to wait until retirement and (likely) have more then if you should be salary sacrificing into your super. I'm not a qualified financial planner and don't have property so my knowledge is only based on my experiences which are the stock market, ETFs and super.

If you're after some general 101 bits and pieces for investing into the stock market check out this site as it provides a decent overview of investing, what to look for etc. Alternately Mr Money Moustache has some good resources around investing, what to look for etc and there's podcasts such as Money Mates which help with entering the stock market.

 

[footy75]

Guy at my work who just retired said he was able to retire t earlier because he put 50 per cent of his pay into super for the last 5 years.
(He already had house payed off.)

He said he wished he salary sacrificed earlier.

But u definately got to diversify.... no guarantees ur making it to retirement.

 

[kaiserchief13]

The way I look at it is if your 50+ try and sacrifice as much as possible. If your younger though is it worth sacrificing your lifestyle to retire earlier? For me no it's not

 

[The Edukator]

I hear a lot of people tell me to do this but it's about opportunity cost for me. I believe I can do better investing in property than putting it into super.

 

[The Cryptkeeper]

I take advantage of the tax break by salary sacrificing.

The last three weeks have had me rethinking that strategy.

 

[footy75]

Yep its a tough time

 

[raskolnikov]

Looking at my super balance every day is seriously getting me down. Anyone got a spare cardboard box I can live in when I retire?

 

[BuddysBiggestFan]

Anyone know a super fund with low fees that the Barefoot Investor suggests doing.

The one he uses Hostplus has similar fees to the fund Im in (Cbus), about $1500 per year. Not sure where he got fees of only $0.02 per $100 that he writes in his book.

 

[PoppedCorn]

Looking at my super balance every day is seriously getting me down. Anyone got a spare cardboard box I can live in when I retire?

I havent looked
Lady atvwork is four years away from her and hubby pulling the pin and she said it had dropped by 30 grand already

Is there anything we can do??
Cant take it and stash it under the bed so what more can we do?

 

[The Cryptkeeper]

Anyone know a super fund with low fees that the Barefoot Investor suggests doing.

The one he uses Hostplus has similar fees to the fund Im in (Cbus), about $1500 per year. Not sure where he got fees of only $0.02 per $100 that he writes in his book.

I’m with Australian Super based on their Canstar profile.

Jump onto the Canstar site mate, it independently reviews every super fund.

 

[BuddysBiggestFan]

I havent looked
Lady atvwork is four years away from her and hubby pulling the pin and she said it had dropped by 30 grand already

Is there anything we can do??
Cant take it and stash it under the bed so what more can we do?

Just ride it out. My parents were worried during the GFC crash and stupidly pulled it all out. Lost about $60K. I should have advised against it.

 

[ash_1050]

If you're not retiring for at least the next 20 years just leave it where it is. Moving your super to cash now locks in your 30%+ losses and you're having to try time the market to get in at a lower point. Until you get anywhere near retirement your account balance going down temporarily doesn't matter one iota.

 

[Herne Hill Hammer]

My work pays the compulsory 9.5% super guarantee plus I salary sacrifice 5.25% and the company matches it, so 20%. It's a sweet deal.

 

[Scallop Industry Thug]

With super returns going gangbusters at the moment

Checks date.

* you, pangolins.

 

[Lach72]

My work pays the compulsory 9.5% super guarantee plus I salary sacrifice 5.25% and the company matches it, so 20%. It's a sweet deal.

Ha yeah. I levelled mine up to 15%...got it all into cash at the right time so the the tax saving is making the only money at the moment

 

[00Stinger]

just make sure your super contributions don't get over $25K a year because that is when the tax man really starts to visit

 

[00Stinger]

Guy at my work who just retired said he was able to retire t earlier because he put 50 per cent of his pay into super for the last 5 years.
(He already had house payed off.)

He said he wished he salary sacrificed earlier.

But u definately got to diversify.... no guarantees ur making it to retirement.

seems stupid as his tax would be going through the roof on his contributions over $25k. Anything over that limit he should have invested somewhere else

 

[footy75]

seems stupid as his tax would be going through the roof on his contributions over $25k. Anything over that limit he should have invested somewhere else

Yeah I don't know excactly how it works that's just what he said.

It was in January and he retired and got it out I assumed before all this stuff... as for tax etc no idea.

 

[Sydney Kicker]

seems stupid as his tax would be going through the roof on his contributions over $25k. Anything over that limit he should have invested somewhere else

I think you can go over the 25k limit if you haven't used all your cap space in recent years. From ATO...

"From 1 July 2018, members can make 'carry-forward' concessional super contributions if they have a total superannuation balance of less than $500,000. Members can access their unused concessional contributions caps on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire."

Contribution caps | Australian Taxation Office

Work out your concessional and non-concessional contribution caps by financial year.

www.ato.gov.au

 

[00Stinger]

I think you can go over the 25k limit if you haven't used all your cap space in recent years. From ATO...

"From 1 July 2018, members can make 'carry-forward' concessional super contributions if they have a total superannuation balance of less than $500,000. Members can access their unused concessional contributions caps on a rolling basis for five years. Amounts carried forward that have not been used after five years will expire."

Contribution caps | Australian Taxation Office

Work out your concessional and non-concessional contribution caps by financial year.

www.ato.gov.au

I am pretty sure that is capped to a 5 year period so in effect $125k over any 5 year period

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