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Q&A - Salary sacrificing

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Published on: Friday, October 16, 2009

Q. Why has the government made salary sacrifice harder? And do you think I should look at other ways to grow my wealth, given these changes? 

A. I think salary sacrifice into super is still a great idea as it takes income that might be taxed at 45% and only slugs it for 15%. It is a pity that the Government has reduced the maximums from $50,000 to $25,000 for under-50s and from $100,000 to $50,000 for 50s and over but it still is a good wealth-building tool. I reckon young people should try to slip maybe $2,000 a year or $40 a week into super from as soon as they start work as this would turn into around $1 million on top of what compulsory super will give you from the 9% contribution. Saving has to be seen as a sexy, sensible thing to do and if you get into it early, then you won’t have panic attacks in your 40s and 50s when you see how low your super is. Average super balances for retirees are unbelievably low and the best way to have a great life from your 50s on is to know your super is sensationally high and getting higher. Sacrificing a little bit of salary every week of your working life will make your non-working life worth living! 

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.


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