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Salary sacrificing into your super

Salary sacrificing part of your income into your superannuation brings about a lot of financial benefits. Employers in Australia are required to contribute the equivalent of 9.5% of an employee’s salary into a nominated superannuation fund. On top of these contributions, employees can request that their employer reduce their salary and direct the additional cash into their superannuation.

There are a number of benefit to salary sacrificing into your superannuation:

1. Reduce your tax liability: Superannuation contributions are taxed at the low rate of 15% (or 30% for individuals earning over $300 000). Therefore, by making additional contributions from your before-tax income, you are likely to decrease your overall tax liability.

2. It won’t cost your employer anything: Your employer will not have to pay any fringe benefits tax on your additional superannuation contributions, so it shouldn’t be an issue for you to make an arrangement.

3. Compound interest! The more that you contribute to your superannuation early in life, the harder your money will work for you. Even a very small additional contribution each week when you’re young can make a big difference to the final size of your nest egg.

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Transition to retirement

November 25, 2020

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.