We all enjoy lunch out on a Friday with our friends or colleagues but is this regular outing coming at the cost of an earlier retirement?
We all need to relax and unwind as the weekend approaches but just maybe we need to look at skipping a few lunches to fast track our retirement plans.
Super will likely be the biggest investment you have in your lifetime after a house. So, it makes perfect financial sense to get started early to build this balance.
Adding to your super in your twenties can make a big difference to your final super balance at retirement.
The compounding benefit of super helps your balance grow over your working life. A small regular contribution now could mean a big reward for you at retirement, not to mention the tax savings along the way!
Salary sacrifice contributions are taxed at 15% when they are received by your super fund. The extra payments are taken out of your salary before you’ve paid income tax, you only pay 15% tax instead of your marginal tax rate (which as you earn more can be as high as 47%).
For example, if a young doctor chose to add just an extra $50 per week to their super fund (on top of their 9.5% SG contributions) at the start of their working career, by the time they reach age 60 this could mean up to an extra $320,000 in superannuation.
Super really is a "no brainer" for not only the compounding benefit on your investment but also the tax concessions available.
So next time you set off for a café or restaurant, keep in mind that the most modest of contributions to super early on in your career can make a big difference to what you end up with in retirement.
The team at Cutcher & Neale are here to help, please get in touch if you would like further assistance.
