Why you should consider salary sacrificing
Super contributions have increased from the 9% we have been used to for so long, to 9.5%. It’s easy to assume then, that when we retire, our superannuation balance should definitely be enough for us to live on. I mean, the government has taken care of that by increasing our compulsory contributions each year right? RIGHT?
Probably not.
If you have dreams of travelling and discovering all corners of the world upon retirement, this may not be as easily achieved as you once thought.
Statistics show that to live a ‘modest’ retirement, you will need to spend about $23,000 per year if you are a single, or nearly $34,000 if you are part of a couple. If you want a comfortable retirement, lifestyle, these figures increase significantly to $42,500 (single) and $58,500 (couple).
You’re probably realising now that if you want to live out the retirement plans you daydream about while waiting for the kettle to boil at your 3pm coffee break, that you’ll probably have to start saving more money. And you’re probably remembering how boring and tedious saving money can be.
There is actually an easier way to build up your retirement fund: salary sacrificing superannuation contributions.
When saving money, the more automatic it is, the more likely you are to reach your goals. The same can be said for your superannuation. If you automatically deduct 5% from your salary into your super, the results can be substantial by retirement. This obviously depends on the time you have until retirement and the returns generated by the funds invested, but as they say, ‘Rome wasn’t built in a day’.
What makes salary sacrificing an attractive option is that the contribution is made before your tax is taken out. While you will have to pay the 15% superannuation contributions tax, if you are on the average Australian marginal tax rate of over 30%, you will save the difference. This means making a $100 contribution to super (via Salary Sacrifice), will not necessarily mean a $100 fall in your take home pay!
So start thinking about bringing those retirement dreams closer to reality today. Talk to one of advisers at Avante Financial on 1300 788 650 today about how salary sacrificing can help you.
This document was prepared by Asteron Life
