Top up your Super or Pay off your mortgage?

TL;DR

Salary sacrificing into Super can provide tax savings and the benefits of compounding interest for retirement.

Transcript

foreign we just completed a podcast on the I suppose the looking at the alternative where people pay extra money off their home loan and instead of using that to pay off the home loan that money is salary sacrificed in pre-tax dollars into your superannuation fund and yeah let's all go through the good benefits of doing that Amy do you want to kick... Read More

Key Insights

• 🚕 Salary sacrificing into Super provides tax savings, with the money being taxed at a lower rate than take-home pay.
• 🤑 Compounding interest over a long period of time can significantly grow the invested money.
• 🤑 Accessing funds in Super is limited, and volatility in the market can affect the value of the invested money.
• 😚 Individuals closer to retirement may find salary sacrificing into Super more advantageous.

Questions & Answers

Q: What is the main benefit of salary sacrificing into Super?

The main benefit is the tax saving, as the money put into superannuation through salary sacrifice is taxed at a lower rate than take-home pay.

Q: Who can benefit the most from salary sacrificing into Super?

Individuals in their 40s and 50s who are closer to retirement can benefit the most from this strategy, as they have a longer period of time for compounding interest to work in their favor.

Q: What are the downsides of salary sacrificing into Super?

One downside is the limited access to funds, as individuals typically cannot withdraw from their superannuation until they reach preservation age (60 or 65). Another downside is the potential volatility of the market, which can affect the value of the invested money.

Q: Is salary sacrificing into Super suitable for everyone?

The strategy may be more appealing to individuals closer to retirement, but it is important to consider personal circumstances and objectives before deciding to salary sacrifice into Super.

Summary & Key Takeaways

• Salary sacrificing into Super is a strategy where extra money from a home loan is invested in a superannuation fund instead of paying off the mortgage directly.

• The main benefit of salary sacrificing into Super is the tax saving, as the money put into superannuation through salary sacrifice is taxed at a lower rate than take-home pay.

• Another benefit is the potential for compounding interest over a long period of time, especially for individuals in their 40s and 50s who can use this strategy to help pay off their home loan in retirement.