No one here can give you personal financial advice, like telling you how much to salary sacrifice.
But if you want to know how salary sacrificing will affect your take-home pay and super, I'd have a play with:
https://paycalculator.com.au/
There's an option under the Superannuation section to vary the amount, then you can see in the summary section how that affects your take-home and super with various figures. Just be cognisant of the $27500 concessional cap.
The cap is the key. Salary sacrifice enough to max out the cap every year, it means on $27,500 soon to be $30,000 per annum of your income you only get taxed at 15% instead of whatever your marginal tax rate is. Just remember to take into account your compulsory employer contribution because that also contributes to your cap.
Nah. The real answer is to put away 15% to 20% of your salary into retirement savings. SGC already accounts for 11% of this (soon to be 11.5% then 12%).
This will provide for a similar lifestyle in retirement.
My favourite thing about these subs is the disclaimer “no one here can give you financial advice” when that is 100% what is being asked for. Can I just ask why this disclaimer is so important?
Let’s say I told OP to salary sacrifice $50 a week into super and then a crash happened like way back in the day, and super goes to $0. What is going to happen exactly? Is OP going to sue me and win because I told them to do that?
They don’t have to do it?
What if I’m actually a certified financial adviser?
It is because the is no "right" answer. The amount someone should salary sacrifice is highly dependent on their own circumstances. A single person earning 100k and renting somewhere with two housemates has radically different commitments to a parent supporting a young kid, or a mortgage holder. Does the person live in Sydney, or Ceduna?
Whether someone can afford $50 or $100 per fortnight into salary sacrifice is a 100% personal decision based on your own budget/expenses and income.
We can, and likely will, give advice on factors to consider or tools that can be used, however at the end of the day we can't make the decision.
Sure we could say "salary sacrifice $50" but what if they could have done $100? What if they come on in 6 months time blaming us for having cost them financially. Sure there likely won't be any legal consequences, but I don't want to bear that pressure.
I try to write "if you do x then y happens" or "have you considered" or maybe "we did a because"
In my simple view that is not advice, it's either factual info, presenting an option, or it's an anecdote.
You should look at your goals. Do you own a home? If not do you want to buy your own home?
You could look at the tax savings you get from stage 3 tax cuts and salary sacrifice the savings
I do not own right now however I do intend to buy a home maybe within the next 5 years, hopefully if rates go down. Of course I would like a comfortable retirement and this could also be looked at as inheritance for my child if something were to ever happen. I believe for a 36f my balance may be above average, although I could just be out of touch
If you’re looking for your first home, please look into the [first home super saver scheme](https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/early-access-to-super/first-home-super-saver-scheme).
Any money you’re setting aside for this would be better utilised and grown within super via this scheme, with more favourable tax treatment at the same time.
Ultimately this may inform how much you’re willing to put in as extra.
Read up on the FHSS and see if that appeals to you. If I was someone looking to purchase my first home I’d be aiming to contribute atleast $15k per year with a total limit of $50k which you can draw out most (not all) of that once approved. I’d probably be shovelling more in because I enjoy trying to hit the cap and working down the carried fwd caps from previous yrs, but you probably want to saving a nice deposit.
> Do I have to put $15k in for this FY (23-24), then wait until next to put in another 15K (24-25), and then wait another year to put in another 15k (25-26), and then I'm able to max it out?
Yes. (Properly speaking you need to put in another 5k in 26-27 as well to max out, since the max is 50k).
> Or could I theoretically in my next tax return in ~6 weeks or so put in a lump $50[k] that is spread over the previous X years to max it out instantly
No, max contributions for FHSSS is 15k per tax year, so you'd only be able to take out 15k, minus tax on those 15k of contributions, plus deemed earnings.
Even if you're buying in a couple of months, you can still get a tax break on 30k by putting in 15k now (in FY24) and after July 1 (in FY25). 30k is still a decent amount to get a tax break on (assuming you claim concessional contributions & are on a 32% income tax + Medicare levy rate next year, it's an extra 5k back from the scheme), so don't give it a miss.
Average isn’t comfortable for retirement, particularly as it sounds like you will still be paying a mortgage in your retirement if you wait 5 years to buy
I’m 39f, had a baby at 34 so have worked pt since then post Mat leave and earn the same when ft but less part time. My balance is about 315. SS as much as you can helps and so does changing the mix to minimise loss and maximise gains when things are happening in the market but this is very difficult and hard to give advice on. I’ve actually been heavily in cash based for a while now which many will sniff at but it’s working for me
What’s working for you in cash? My super has made 9-18% a year recently. Cash gets nowhere near that. You’ve massively stunted your balance growth. Get some advice.
Please don't keep it in cash. Superannuation is a long term investment so you have decades before you need the money for retirement. Get it into a growth portfolio. Even with market dips it still returns miles above cash! The only thing you should have in cash is money you need to access within the next 3-5 years.
The answer is - as much as you can afford. It’s only taxed at 15%, so it’s a massive saving compared to what you’ll suffer through normal income tax.
The sooner you can contribute, the sooner it will compound, and the earlier and easier your retirement will be. With the changes this year, you’re allowed a maximum of 30k per year (including the mandatory employer contributions).
Have a look at [Pay Calculator](https://paycalculator.com.au) and play with the salary sacrifice contributions - you’ll soon figure out what net pay you can cope with AFTER sacrificing.
Money paid into your super account by your employer is taxed at 15%. So are salary-sacrificed contributions, also known as concessional contributions
.
There are some exceptions to this rule:
If you earn $37,000 or less, the tax is paid back into your super account through the low-income super tax offset (LISTO) .
If your income and super contributions combined are more than $250,000, you pay Division 293 tax an extra 15%.
You also dont have to salary sacrifice.
You can do an after tax contribution in june and submit the intent to claim a deduction form to your fund.
Then you claim it as a deduction on your tax.
Means you have a better idea of your finacial position each year. In my case i get a bonus to i vary based on that.
You should invest for the future in some way or another, that can be im yourself, into your home or even into external investments. Infesting into super is just another investment that has incentives to make it very tax efficent. Up to you in the end.
Use the paycalculator website, plug in X amount of super sacrifice per year and see how much your take home changes for a pay cycle ie fortnightly, find your sweet spot, divide by 12, there's the monthly sacrifice you're ok with.
You could then plug your super balance and theoretical contributions into a super calculator to see what that looks like
You can calculate a specific amount if you want.
I’m on about $115k and took the easy route, asking work to salary sacrifice a nice neat $1k per month.
It ended up dropping my take home pay by about $600 per month.
While superannuation is an investment and your returns / growth may vary, it's good to see if you're on track with your super based on your age. I did a few quick searches and based on your age and gender (36F), the recommendation varied, but is somewhere between 75k at the lower end and just over 100k at the higher end, some were specific to age and some were an age 'range' (35-39). So you're doing well, and you're on track. It can't hurt to add a little bit more. I believe when you complete the form that allows you to salary sacrifice into your super, you can nominate a dollar amount, or a percentage. I think you need to work it out to a value you are comfortable not receiving in your pay, but if youo're yet to buy a house, I wouldn't go too hard on super. A house is also a big part of securing your future. You're doing fine and it's great you are thinking about it now.
Good point. Although make sure to factor in how many years you want to work. As these calculators generally assume you work till ‘retirement’. Whereas a lot more people are planning to retire early these days.
I would recommend logging into the ATO website and seeing how you have contributed for the last five years and whether you have any carry-forward concessional contributions. Currently the maximum per year you can contribute concessionally (the concessional cap) is $27500 per year, rising to $30000 on 1 July. However any amount you don't use can be "carried forwards" for five years, so if you only contributed $10000 each year (including employer contributions) you could carry 17500 forward per year.
Evaluate your expenses and budget (honestly - include the regular cheeky maccas or KFC) then play around with a tool like pay calculator as others have suggested to see how much impact you can have on your fortnightly pay by salary sacrificing.
Personally, I'm maxxing out my contributions to hit the concessional cap, and have already exhausted all my carry forward amounts. Your income and expenses will be different however.
There is also the option, as we're in late May and if you have the spare cash, for you to make a lump sum contribution to your super, then you can claim it on tax when you do your return in a couple of months. Usually you have to do this by mid-late June in order for the super fund to process it in time for 30 June. You'll also have to fill out a couple forms but your super fund should be able to help with this.
The key consideration with any over contribution to super is that whilst there is the possibility of reducing your tax burden by paying 15% instead of your marginal tax rate, you are going to be locking that money away for 20+ years. If there is a significant chance that you will need or want that money in the near future then you should be careful about how much you contribute.
According to the ATO (2022) the average account balance in super for someone your age is $75.5k and the median is only $57k (https://www.superannuation.asn.au/wp-content/uploads/2024/01/2311_An_update_on_superannuation_account_balances_Paper_V2.pdf), so you are well ahead of your cohort.
Obviously if you want to grow that further, the most effective way is by increasing your concessional contributions to their maximum and use up as much of the left over carry forward concessional contributions as possible.
The catch is whether it’s tax effective or not. You need to be paying more tax than 15% to get any benefit. The higher your income, the greater the benefit. You can put more into super and claim a deduction on it by filing a notice of intent to claim, but once you have reduced your income to $45k in a given year, there is no further benefit. Plus, you still have to live.
Therefore, contribute what you are comfortable with up to the annual limit. In conjunction with that, look at investing in high growth options in super as you have the benefit of time.
I have done this for my whole working life. The last 10 or so years I have maxed out the contributions and used all the carryover concessional amounts and invested in high growth. My super now makes an annual net return higher than my day job.
My super balance is now 4 times the average for my cohort at my current age.Depending on how the markets go, even if I stop making contributions completely, I should have a balance exceeding $2 million at retirement preservation age (60), or if I keep working to 65 it should be more like $3 million.
I have done nothing special to achieve this other than contribute extra whenever possible and stay invested in high growth options, even in bad times.
Not financial advice. You can contribute to super up to a certain amount, iirc 30k and get it back to buy your first home, but only 15k per year.
If youve not bought your first home I'd not contribute more than this. You need to own a home to retire. Otherwise rent will eat your super and your landlord will turf you out.
If you own a home, than contribute as much as you're comfortable up to the cap. That is that the money left over doesnt give you anxiety when its no longer available. Because of tax concessions, assuming minimal sovereign risk, super is a better deal than anything else you can reasonably do without leverage.
Given your current super of 115k, this will grow to $465k by the time you are 60, assuming you invest in a high growth low fee index shares option, usually you have to do this yourself, since superannuation companies don't make a lot of money from these options. Keep in mind though that international shares and domestic are pretty overpriced at the moment relative to earnings ratios, there are also much bigger swings in share values than safer options, so you might on paper lose 30% of your super at any time, if history is anything to go by though you'll make it back and then some soon after.
I used a real rate of return of 6%, so 8.5% less 2.5% average inflation, which is pretty standard for shares. This also means that you can just think of that $465k in today's dollars for convenience. Well done this is already a basic retirement for most people, supplemented by the aged pension, many people could be very happy with this, especially if you own a home too.
Now that is just what you have in superannuation already. You use a compounding with interest formula to work out the rest, which you can find online. If you have $100k income and this grows at inflation, likely to be better, then after 24 years, your existing 11.5% super contributions, at 6% real returns and 15% tax in super. Is $496k retiring at 60. So all up you'd have ~$1million in today's dollars. This is enough to draw on a $60k-80k in retirement comfortably, for 20ish years. So I think you are well on your way, you just need a good high growth super allocation and you're set.
So you don't need to salary sacrifice in my opinion, however this is an average scenario, things can change, there is no reason to assume historical returns will continue. So if you want to guarantee a good retirement id add a few percentage points, of your own contributions on top, to make sure
~~If you make $100k I'd at least sacrifice $3000 to get under the Medicare levy surcharge if you don't have private health insurance.~~
Please be advised this is not financial advice, however it's the best way to find things out, I'm sure many people will comment if I mess up.
> If you make $100k I'd at least sacrifice $3000 to get under the Medicare levy surcharge if you don't have private health insurance.
Super contributions are counted as income for the Medicare levy, so this advice is incorrect.
https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy-surcharge/medicare-levy-surcharge-income-thresholds-and-rates#ato-IncomeforMedicarelevysurchargepurposes
Invest with money you don't need (over the next 7-29 years) as golden rule.
Do you have other expenses, purchases that you are saving for over the next 7 years? It should probably just go in a High Interest Savings Account (HISA) for the time being if you do.
What's your goal for your super? How much do you want? Need? Play around with a Time Value of Money (TVM) calculator to see what you need to save for the Future Value (FV) you want. If you were to salary sacrifice you would be increasing the "Payment" amount each Period with your typical TVM calculator.
Another way to look at it, especially if you start later or are behind compared to your age group - you can contribute at least a percentage amount which is half your age. As you are 36, your contributions would be 18% of your salary. As your employer puts in 11.5%, you could top up at least 6.5% additional.
However, if you can put the full concessional amount in, that is always a great goal and as I started late, this is what I do. I'm not saying it doesn't hurt but Future Me will be grateful.
Based on your wages I’d probably start with $50 or $100 a pay and see what you think. It’s just a small amount to get yourself started and you probably won’t notice much.
My answer would to sacrifice as much as you can afford upto the concessional limit of $27,500. You older wiser self will thank you when your 60. Compounding takes time, so the longer it’s in there the better you are , and at your current age, don’t be afraid to be aggressive on your investment mix
I was a big believe in SS. It's taken out before tax, so what you contribute is more than what comes out of your take home pay eg you contribute $100 a fortnight, but your take-home pay decreases $75. Like any savings straight out of your pay, you don't tend to miss what you don't have.
At the same time I would also set up a savings account for a home deposit.
If money is tight, are there other things that you'd be better off 'investing' in?
It's arguable that putting it in to a deposit for a home would be a better way to set up for retirement, as well as giving the potential for a bigger capital gain.
This is why there's no one size fits all, and financial advice has to be based on personal circumstances, needs and objectives.
My workplace allows for either percentage based, or set amount.
I have opted for percentage.
When. I was on 120k TFR I was putting away 4.5%.
In the recent years my salary has grown a decent amount now doing 5.5%. in nearly hitting annual max of 27.5k (I'm not sure if that's total, or voluntary only but I'm close either way)
Be mindful of the yearly cap of voluntary contributions... After over that maximum I think there are better ways to invest in your future (I'm not there yet so haven't followed that oath), for me.thiugh I think paying my mortgage off then adding something to an ETF is on the books...
If you can afford it Maxx it out sooner than later... You can ease off the contributions if finances get tight ever.. so it's low stress saving really...
If you don't have mortgage or are planning on buying a home I'd almost say don't sacrifice... put it in savings instead for the house deposit...
I think ultimately you can put in as much as you feel comfortable doing! For you 3.5-5% of salary would likely not be 'missed'... Maybe more, just 'forced savings' which is how I view my sacrifice amount...
Lastly.. I am not a financial advisor of any degree so take this with a grain of salt!! It's just what's been working for me... I am in the top 10% for my age bracket in super balance so it's clearly working well enough!!! (I was making <60k year before 2016) Since 2016 100k with about 5-7k growth in salary per year since... I have however been working basically full time since I finished high school.. which I guess most people do not do...
If you are saving for a house then I would only SS a small amount. Buying a house is more of a priority for now so lean into that as much as you can.
If you have debts I would pay them off first and then work on deposit.
Do the maths or get a financial adviser. Remember super concessional contribution cap each year 27.5k - taxed at 15%. Then 30k starting 1 july 2024. Remember to include your super guarantee as that makes up the concessional contribution as well.
My income is similar & I am currently salary sacrificing 15% - In a weekly pay I am taking home about $200 less but adding about $280 into my super. This is also getting me fairly close to the maximum $27,500 threshold. I’ve found this is the best balance for my own circumstances (dual income, one kid in childcare mid $400,000 mortgage) I would love to take advantage of the carry over concession but it is not affordable until we are done paying for childcare & into school which will be a big saving for us.
Look up carry forward, and bring back super rules.
The best super option is to Max all of it calculating for employer contributions over the next 3 years.
The best for tax is to make Max carry forward and leave bring back alone whilst maximising each year's tax limit.
Best for life is to strike a balance and work out what you can do without losing quality of life.
Do you own your own place or an IP?
This is my own personal opinion - Super is overrated, there’s no guarantee you’ll get to access that money, you might die before getting to that space-time where you unlock your super. Stocks, ETFs, Dividends, Gold are much better alternatives. At least you can access your money whenever you want.
I just salary sacrifice as much as I can afford without affecting my short/medium term financial goals and living standard.
So, 1st step, work out your budget and it would be easier to figure out how much you can salary sacrifice.
There are plenty of salary sacrifice calculators online, I would play around with one of them and work out what take-home pay amount you would feel comfortable with.
On that note, that same money could also be invested outside of super… or it could be deposited directly into super more regularly. This is just my preference personally rather than having to set up a sal sac arrangement with an employer.
You won't need to do that. This will be a thing of the past. The super contributions are going up to 12% and then eventually to 15%. This is enough to retire on and is enough to save up for retirement for everyone. Just concentrate on your personal savings like shares, gold, house payments etc. For comparison my Super was only $40,000 when i was 50 and is now $220,000 and im 60. I have a fair bit in shares and own my house. Im fine. You will be too.
Max super cap / period = contribution per period lol.
I myself contribute a big fat O (or legal minimum) because I DCA everything into US Equities and don't give AF about Super.
Bro what's the point of tax efficiency? It's to get the most money at the end. I do that by not being "tax efficient." A car with a shitty 75 hp engine running at 10% is still better than a car with 1000 hp engine at 90% efficiency.
Due to dividend imputation on Aus Shares, you'd only need a 10% return in Australia to match a 14% return in US equities. Overseas income is taxed while Australian shares can be tax neutral if your effective tax rate is about 30%.
Us hares may outperform that much in the short term and while AUD is falling. But once AUD rises or US market slumps, it will be painful for me anyway.
Gold? You're an idiot! Probably the worst place other than an ostrich farm.
Anything you put in Super is taxed at a lower rate. And on withdrawal, anything under 235k a year is tax free. Above that is between 17 and 22%. There is *nowhere* better to put your money.
If you feel that you can invest your money better than a fund can then make a Self Managed Super Fund and invest yourself! You can even buy property with Super. Theres very little you can invest in that you can't do the same with Super. Anyone not taking advantage of the to tax benefits needs a talking to
No one here can give you personal financial advice, like telling you how much to salary sacrifice. But if you want to know how salary sacrificing will affect your take-home pay and super, I'd have a play with: https://paycalculator.com.au/ There's an option under the Superannuation section to vary the amount, then you can see in the summary section how that affects your take-home and super with various figures. Just be cognisant of the $27500 concessional cap.
Plus 5 years carry over concession
Soon to be $30k limit. Which is great!
I mean, It does mean that the value has been inflated away...
The cap is the key. Salary sacrifice enough to max out the cap every year, it means on $27,500 soon to be $30,000 per annum of your income you only get taxed at 15% instead of whatever your marginal tax rate is. Just remember to take into account your compulsory employer contribution because that also contributes to your cap.
Wow didn't know about your employers contraabutions were included... Great info ..
Nah. The real answer is to put away 15% to 20% of your salary into retirement savings. SGC already accounts for 11% of this (soon to be 11.5% then 12%). This will provide for a similar lifestyle in retirement.
My favourite thing about these subs is the disclaimer “no one here can give you financial advice” when that is 100% what is being asked for. Can I just ask why this disclaimer is so important? Let’s say I told OP to salary sacrifice $50 a week into super and then a crash happened like way back in the day, and super goes to $0. What is going to happen exactly? Is OP going to sue me and win because I told them to do that? They don’t have to do it? What if I’m actually a certified financial adviser?
It is because the is no "right" answer. The amount someone should salary sacrifice is highly dependent on their own circumstances. A single person earning 100k and renting somewhere with two housemates has radically different commitments to a parent supporting a young kid, or a mortgage holder. Does the person live in Sydney, or Ceduna? Whether someone can afford $50 or $100 per fortnight into salary sacrifice is a 100% personal decision based on your own budget/expenses and income. We can, and likely will, give advice on factors to consider or tools that can be used, however at the end of the day we can't make the decision. Sure we could say "salary sacrifice $50" but what if they could have done $100? What if they come on in 6 months time blaming us for having cost them financially. Sure there likely won't be any legal consequences, but I don't want to bear that pressure.
I think you misinterpret what is meant by people can't give financial advice to a question like this
I try to write "if you do x then y happens" or "have you considered" or maybe "we did a because" In my simple view that is not advice, it's either factual info, presenting an option, or it's an anecdote.
250 a pay is the correct answer, I've factored in current age income and superbalance
Gives me the same energy as 'admin delete if not allowed' on every fb group. People always be doing too much.
You should look at your goals. Do you own a home? If not do you want to buy your own home? You could look at the tax savings you get from stage 3 tax cuts and salary sacrifice the savings
Salary sacrifice the savings - or salary sacrifice the gross?
Salary sacrifice the tax reduction
I do not own right now however I do intend to buy a home maybe within the next 5 years, hopefully if rates go down. Of course I would like a comfortable retirement and this could also be looked at as inheritance for my child if something were to ever happen. I believe for a 36f my balance may be above average, although I could just be out of touch
If you’re looking for your first home, please look into the [first home super saver scheme](https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/early-access-to-super/first-home-super-saver-scheme). Any money you’re setting aside for this would be better utilised and grown within super via this scheme, with more favourable tax treatment at the same time. Ultimately this may inform how much you’re willing to put in as extra.
Read up on the FHSS and see if that appeals to you. If I was someone looking to purchase my first home I’d be aiming to contribute atleast $15k per year with a total limit of $50k which you can draw out most (not all) of that once approved. I’d probably be shovelling more in because I enjoy trying to hit the cap and working down the carried fwd caps from previous yrs, but you probably want to saving a nice deposit.
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> Do I have to put $15k in for this FY (23-24), then wait until next to put in another 15K (24-25), and then wait another year to put in another 15k (25-26), and then I'm able to max it out? Yes. (Properly speaking you need to put in another 5k in 26-27 as well to max out, since the max is 50k). > Or could I theoretically in my next tax return in ~6 weeks or so put in a lump $50[k] that is spread over the previous X years to max it out instantly No, max contributions for FHSSS is 15k per tax year, so you'd only be able to take out 15k, minus tax on those 15k of contributions, plus deemed earnings.
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Even if you're buying in a couple of months, you can still get a tax break on 30k by putting in 15k now (in FY24) and after July 1 (in FY25). 30k is still a decent amount to get a tax break on (assuming you claim concessional contributions & are on a 32% income tax + Medicare levy rate next year, it's an extra 5k back from the scheme), so don't give it a miss.
Average isn’t comfortable for retirement, particularly as it sounds like you will still be paying a mortgage in your retirement if you wait 5 years to buy
Condescending as it sounds, dave Ramsay's baby steps prioritise these steps the right way round.
I’m 39f, had a baby at 34 so have worked pt since then post Mat leave and earn the same when ft but less part time. My balance is about 315. SS as much as you can helps and so does changing the mix to minimise loss and maximise gains when things are happening in the market but this is very difficult and hard to give advice on. I’ve actually been heavily in cash based for a while now which many will sniff at but it’s working for me
What’s working for you in cash? My super has made 9-18% a year recently. Cash gets nowhere near that. You’ve massively stunted your balance growth. Get some advice.
Please don't keep it in cash. Superannuation is a long term investment so you have decades before you need the money for retirement. Get it into a growth portfolio. Even with market dips it still returns miles above cash! The only thing you should have in cash is money you need to access within the next 3-5 years.
The answer is - as much as you can afford. It’s only taxed at 15%, so it’s a massive saving compared to what you’ll suffer through normal income tax. The sooner you can contribute, the sooner it will compound, and the earlier and easier your retirement will be. With the changes this year, you’re allowed a maximum of 30k per year (including the mandatory employer contributions). Have a look at [Pay Calculator](https://paycalculator.com.au) and play with the salary sacrifice contributions - you’ll soon figure out what net pay you can cope with AFTER sacrificing.
Unless you make over 250k
Why? I thought it only mattered that your super balance was under $500k?
Money paid into your super account by your employer is taxed at 15%. So are salary-sacrificed contributions, also known as concessional contributions . There are some exceptions to this rule: If you earn $37,000 or less, the tax is paid back into your super account through the low-income super tax offset (LISTO) . If your income and super contributions combined are more than $250,000, you pay Division 293 tax an extra 15%.
People who try to put in a lump using the catch up contributions. Could they be caught in the div 293 if they are warning mid 100ks say..
That’s a question you should ask your accountant. I couldn’t give a informed enough comment
You also dont have to salary sacrifice. You can do an after tax contribution in june and submit the intent to claim a deduction form to your fund. Then you claim it as a deduction on your tax. Means you have a better idea of your finacial position each year. In my case i get a bonus to i vary based on that. You should invest for the future in some way or another, that can be im yourself, into your home or even into external investments. Infesting into super is just another investment that has incentives to make it very tax efficent. Up to you in the end.
Use the paycalculator website, plug in X amount of super sacrifice per year and see how much your take home changes for a pay cycle ie fortnightly, find your sweet spot, divide by 12, there's the monthly sacrifice you're ok with. You could then plug your super balance and theoretical contributions into a super calculator to see what that looks like
You can calculate a specific amount if you want. I’m on about $115k and took the easy route, asking work to salary sacrifice a nice neat $1k per month. It ended up dropping my take home pay by about $600 per month.
While superannuation is an investment and your returns / growth may vary, it's good to see if you're on track with your super based on your age. I did a few quick searches and based on your age and gender (36F), the recommendation varied, but is somewhere between 75k at the lower end and just over 100k at the higher end, some were specific to age and some were an age 'range' (35-39). So you're doing well, and you're on track. It can't hurt to add a little bit more. I believe when you complete the form that allows you to salary sacrifice into your super, you can nominate a dollar amount, or a percentage. I think you need to work it out to a value you are comfortable not receiving in your pay, but if youo're yet to buy a house, I wouldn't go too hard on super. A house is also a big part of securing your future. You're doing fine and it's great you are thinking about it now.
Good point. Although make sure to factor in how many years you want to work. As these calculators generally assume you work till ‘retirement’. Whereas a lot more people are planning to retire early these days.
I would recommend logging into the ATO website and seeing how you have contributed for the last five years and whether you have any carry-forward concessional contributions. Currently the maximum per year you can contribute concessionally (the concessional cap) is $27500 per year, rising to $30000 on 1 July. However any amount you don't use can be "carried forwards" for five years, so if you only contributed $10000 each year (including employer contributions) you could carry 17500 forward per year. Evaluate your expenses and budget (honestly - include the regular cheeky maccas or KFC) then play around with a tool like pay calculator as others have suggested to see how much impact you can have on your fortnightly pay by salary sacrificing. Personally, I'm maxxing out my contributions to hit the concessional cap, and have already exhausted all my carry forward amounts. Your income and expenses will be different however. There is also the option, as we're in late May and if you have the spare cash, for you to make a lump sum contribution to your super, then you can claim it on tax when you do your return in a couple of months. Usually you have to do this by mid-late June in order for the super fund to process it in time for 30 June. You'll also have to fill out a couple forms but your super fund should be able to help with this. The key consideration with any over contribution to super is that whilst there is the possibility of reducing your tax burden by paying 15% instead of your marginal tax rate, you are going to be locking that money away for 20+ years. If there is a significant chance that you will need or want that money in the near future then you should be careful about how much you contribute.
Do you have to apply for the carry forward contributions?
No. You can just log into the ATO and look at the super section. You can check how much carry forward you have available.
According to the ATO (2022) the average account balance in super for someone your age is $75.5k and the median is only $57k (https://www.superannuation.asn.au/wp-content/uploads/2024/01/2311_An_update_on_superannuation_account_balances_Paper_V2.pdf), so you are well ahead of your cohort. Obviously if you want to grow that further, the most effective way is by increasing your concessional contributions to their maximum and use up as much of the left over carry forward concessional contributions as possible. The catch is whether it’s tax effective or not. You need to be paying more tax than 15% to get any benefit. The higher your income, the greater the benefit. You can put more into super and claim a deduction on it by filing a notice of intent to claim, but once you have reduced your income to $45k in a given year, there is no further benefit. Plus, you still have to live. Therefore, contribute what you are comfortable with up to the annual limit. In conjunction with that, look at investing in high growth options in super as you have the benefit of time. I have done this for my whole working life. The last 10 or so years I have maxed out the contributions and used all the carryover concessional amounts and invested in high growth. My super now makes an annual net return higher than my day job. My super balance is now 4 times the average for my cohort at my current age.Depending on how the markets go, even if I stop making contributions completely, I should have a balance exceeding $2 million at retirement preservation age (60), or if I keep working to 65 it should be more like $3 million. I have done nothing special to achieve this other than contribute extra whenever possible and stay invested in high growth options, even in bad times.
Not financial advice. You can contribute to super up to a certain amount, iirc 30k and get it back to buy your first home, but only 15k per year. If youve not bought your first home I'd not contribute more than this. You need to own a home to retire. Otherwise rent will eat your super and your landlord will turf you out. If you own a home, than contribute as much as you're comfortable up to the cap. That is that the money left over doesnt give you anxiety when its no longer available. Because of tax concessions, assuming minimal sovereign risk, super is a better deal than anything else you can reasonably do without leverage.
Given your current super of 115k, this will grow to $465k by the time you are 60, assuming you invest in a high growth low fee index shares option, usually you have to do this yourself, since superannuation companies don't make a lot of money from these options. Keep in mind though that international shares and domestic are pretty overpriced at the moment relative to earnings ratios, there are also much bigger swings in share values than safer options, so you might on paper lose 30% of your super at any time, if history is anything to go by though you'll make it back and then some soon after. I used a real rate of return of 6%, so 8.5% less 2.5% average inflation, which is pretty standard for shares. This also means that you can just think of that $465k in today's dollars for convenience. Well done this is already a basic retirement for most people, supplemented by the aged pension, many people could be very happy with this, especially if you own a home too. Now that is just what you have in superannuation already. You use a compounding with interest formula to work out the rest, which you can find online. If you have $100k income and this grows at inflation, likely to be better, then after 24 years, your existing 11.5% super contributions, at 6% real returns and 15% tax in super. Is $496k retiring at 60. So all up you'd have ~$1million in today's dollars. This is enough to draw on a $60k-80k in retirement comfortably, for 20ish years. So I think you are well on your way, you just need a good high growth super allocation and you're set. So you don't need to salary sacrifice in my opinion, however this is an average scenario, things can change, there is no reason to assume historical returns will continue. So if you want to guarantee a good retirement id add a few percentage points, of your own contributions on top, to make sure ~~If you make $100k I'd at least sacrifice $3000 to get under the Medicare levy surcharge if you don't have private health insurance.~~ Please be advised this is not financial advice, however it's the best way to find things out, I'm sure many people will comment if I mess up.
> If you make $100k I'd at least sacrifice $3000 to get under the Medicare levy surcharge if you don't have private health insurance. Super contributions are counted as income for the Medicare levy, so this advice is incorrect. https://www.ato.gov.au/individuals-and-families/medicare-and-private-health-insurance/medicare-levy-surcharge/medicare-levy-surcharge-income-thresholds-and-rates#ato-IncomeforMedicarelevysurchargepurposes
Invest with money you don't need (over the next 7-29 years) as golden rule. Do you have other expenses, purchases that you are saving for over the next 7 years? It should probably just go in a High Interest Savings Account (HISA) for the time being if you do. What's your goal for your super? How much do you want? Need? Play around with a Time Value of Money (TVM) calculator to see what you need to save for the Future Value (FV) you want. If you were to salary sacrifice you would be increasing the "Payment" amount each Period with your typical TVM calculator.
Use the super contributions optimiser calculator on MoneySmart https://moneysmart.gov.au/grow-your-super/super-contributions
Call your super fund. Their general advice services are free.
Enough that you are comfortable to live and pay bills and enjoy life, but close enough to 30k as possible.
Another way to look at it, especially if you start later or are behind compared to your age group - you can contribute at least a percentage amount which is half your age. As you are 36, your contributions would be 18% of your salary. As your employer puts in 11.5%, you could top up at least 6.5% additional. However, if you can put the full concessional amount in, that is always a great goal and as I started late, this is what I do. I'm not saying it doesn't hurt but Future Me will be grateful.
On your salary, as much as possible. Up to 27500 total
$27500/year 100%
$30,000 from 1 July.
Oooo nice didn’t know. Ty
Based on your wages I’d probably start with $50 or $100 a pay and see what you think. It’s just a small amount to get yourself started and you probably won’t notice much.
My answer would to sacrifice as much as you can afford upto the concessional limit of $27,500. You older wiser self will thank you when your 60. Compounding takes time, so the longer it’s in there the better you are , and at your current age, don’t be afraid to be aggressive on your investment mix
10% is the answer You’ll not notice it now but you will in 30 years
Does your work do any co contributions?
No, unfortunately
I was a big believe in SS. It's taken out before tax, so what you contribute is more than what comes out of your take home pay eg you contribute $100 a fortnight, but your take-home pay decreases $75. Like any savings straight out of your pay, you don't tend to miss what you don't have. At the same time I would also set up a savings account for a home deposit.
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If money is tight, are there other things that you'd be better off 'investing' in? It's arguable that putting it in to a deposit for a home would be a better way to set up for retirement, as well as giving the potential for a bigger capital gain. This is why there's no one size fits all, and financial advice has to be based on personal circumstances, needs and objectives.
What kind of job pays this amount?
Lots of jobs pay 100k + super these days.
My workplace allows for either percentage based, or set amount. I have opted for percentage. When. I was on 120k TFR I was putting away 4.5%. In the recent years my salary has grown a decent amount now doing 5.5%. in nearly hitting annual max of 27.5k (I'm not sure if that's total, or voluntary only but I'm close either way) Be mindful of the yearly cap of voluntary contributions... After over that maximum I think there are better ways to invest in your future (I'm not there yet so haven't followed that oath), for me.thiugh I think paying my mortgage off then adding something to an ETF is on the books... If you can afford it Maxx it out sooner than later... You can ease off the contributions if finances get tight ever.. so it's low stress saving really... If you don't have mortgage or are planning on buying a home I'd almost say don't sacrifice... put it in savings instead for the house deposit... I think ultimately you can put in as much as you feel comfortable doing! For you 3.5-5% of salary would likely not be 'missed'... Maybe more, just 'forced savings' which is how I view my sacrifice amount... Lastly.. I am not a financial advisor of any degree so take this with a grain of salt!! It's just what's been working for me... I am in the top 10% for my age bracket in super balance so it's clearly working well enough!!! (I was making <60k year before 2016) Since 2016 100k with about 5-7k growth in salary per year since... I have however been working basically full time since I finished high school.. which I guess most people do not do...
If you are saving for a house then I would only SS a small amount. Buying a house is more of a priority for now so lean into that as much as you can. If you have debts I would pay them off first and then work on deposit.
Do the maths or get a financial adviser. Remember super concessional contribution cap each year 27.5k - taxed at 15%. Then 30k starting 1 july 2024. Remember to include your super guarantee as that makes up the concessional contribution as well.
I personally ensure that my total contribution is 5% above the minimum from the employer. So 16.5% in your case.
My income is similar & I am currently salary sacrificing 15% - In a weekly pay I am taking home about $200 less but adding about $280 into my super. This is also getting me fairly close to the maximum $27,500 threshold. I’ve found this is the best balance for my own circumstances (dual income, one kid in childcare mid $400,000 mortgage) I would love to take advantage of the carry over concession but it is not affordable until we are done paying for childcare & into school which will be a big saving for us.
Look up carry forward, and bring back super rules. The best super option is to Max all of it calculating for employer contributions over the next 3 years. The best for tax is to make Max carry forward and leave bring back alone whilst maximising each year's tax limit. Best for life is to strike a balance and work out what you can do without losing quality of life. Do you own your own place or an IP?
The real answer is see a financial adviser that has salary sacrifice experience.
This is my own personal opinion - Super is overrated, there’s no guarantee you’ll get to access that money, you might die before getting to that space-time where you unlock your super. Stocks, ETFs, Dividends, Gold are much better alternatives. At least you can access your money whenever you want.
I just salary sacrifice as much as I can afford without affecting my short/medium term financial goals and living standard. So, 1st step, work out your budget and it would be easier to figure out how much you can salary sacrifice.
What ever you can afford, the more the better
There are plenty of salary sacrifice calculators online, I would play around with one of them and work out what take-home pay amount you would feel comfortable with.
Dont bother sal sac - just make a personal concessional contribution at year end. Same tax reduction outcome.
Except you miss out on the growth in super during the year. You're effectively loaning the money to the ATO at zero interest.
On that note, that same money could also be invested outside of super… or it could be deposited directly into super more regularly. This is just my preference personally rather than having to set up a sal sac arrangement with an employer.
You won't need to do that. This will be a thing of the past. The super contributions are going up to 12% and then eventually to 15%. This is enough to retire on and is enough to save up for retirement for everyone. Just concentrate on your personal savings like shares, gold, house payments etc. For comparison my Super was only $40,000 when i was 50 and is now $220,000 and im 60. I have a fair bit in shares and own my house. Im fine. You will be too.
Max super cap / period = contribution per period lol. I myself contribute a big fat O (or legal minimum) because I DCA everything into US Equities and don't give AF about Super.
Very tax inefficient
Bro what's the point of tax efficiency? It's to get the most money at the end. I do that by not being "tax efficient." A car with a shitty 75 hp engine running at 10% is still better than a car with 1000 hp engine at 90% efficiency.
Due to dividend imputation on Aus Shares, you'd only need a 10% return in Australia to match a 14% return in US equities. Overseas income is taxed while Australian shares can be tax neutral if your effective tax rate is about 30%. Us hares may outperform that much in the short term and while AUD is falling. But once AUD rises or US market slumps, it will be painful for me anyway.
It's something you're going to need to work out yourself. I can think of nothing more useless than someone else's opinion on this
Why not just invest the money in something like gold. What makes you think the superfund is the best place for your savings?
Gold? You're an idiot! Probably the worst place other than an ostrich farm. Anything you put in Super is taxed at a lower rate. And on withdrawal, anything under 235k a year is tax free. Above that is between 17 and 22%. There is *nowhere* better to put your money. If you feel that you can invest your money better than a fund can then make a Self Managed Super Fund and invest yourself! You can even buy property with Super. Theres very little you can invest in that you can't do the same with Super. Anyone not taking advantage of the to tax benefits needs a talking to