Do you want to sacrifice your salary or your retirement?

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 someone about how salary sacrificing can help you.

Adam Montana

Adam is a Principal Client Adviser of Altus Financial and has over 10 years of experience in the financial services industry. Adam is a Certified Financial Planner and is a member of the Altus Financial Executive team.

Adam works with individual investors that need structuring advice, high net worth individuals and SME corporations.

Typically, Adam helps his clients to plan financially for a family ensuring the necessary structures are in place to protect their nest egg, home and family. His key areas of expertise include solving financial problems by analysing strategy, setting discipline, creating total financial solutions for our clients, encompassing the full range of wealth creation and protection disciplines.

Click here to learn more about Adam Montana