Could paying money into Super reduce your tax?

March 14th, 2020 by igniite

Could paying money into Super reduce your tax?

How does retirement look for you?

You might want to travel. You may want to dine out. You might want a busy life. Or the chance to sit back and relax without any money worries. Then there are one off medical costs and vehicle upgrades.

Okay, how much super will be enough?

The Australian Securities and Investments Commission (ASIC: www.asic.gov.au), has done some sums on this for you. They estimate that by the age of 65, a single person who wants a ‘modest’ lifestyle (with annual living costs of $23,032), would need a lump sum of $300,000 (in today’s money).

For a ‘comfortable’ lifestyle (annual living costs of $41,830), they say you’ll need a lump sum of $544,000 by the age of 65. Couples will need a lump sum of $431,000 for a ‘modest’ retirement and $744,000 for a ‘comfortable’ retirement.

So, what do I do?

If you are mid 40’s now is the time to take a look at your super balance and consider starting a salary sacrifice plan if you haven’t already.

Does it seem painful to put extra money into super? Most people find that after they start with a deduction from every pay, they can forget about it and it’s not noticeable.

Even beginning with $25 per week will make a difference over the long term. It is important to remember that $100 Salary Sacrificed now (adjusted for tax) means you are feeding an additional $85 to your super fund. If you were to take that same Gross $100 in wages it may be a small as $65 (where adjusted for tax) in the hand.

Get some details from and expert around if you could actually save a ‘huge’ amount of tax by Salary Sacrificing now.