It’s su­per just how far $ 20 a week can grow

Townsville Bulletin - - NEWS - AN­THONY KEANE

TWENTY dol­lars won’t get you too far these days: per­haps a hand­ful of take­away cof­fees, a bought lunch or two, or a sin­gle cock­tail at a bar on the week­end.

How­ever, $ 20 goes a long way, for a long time, in your su­per­an­nu­a­tion.

Pro­jec­tions by su­per in­dus­try group ASFA show that salary sac­ri­fic­ing $ 20 a week into su­per can de­liver a 20year- old an ex­tra $ 435,000 in re­tire­ment, or $ 87,000 in to­day’s dol­lars.

A 30- year- old can build an ex­tra $ 198,000 ($ 55,000 in to­day’s dol­lars), while for a 40- year- old it’s $ 82,500 ($ 33,000). A 50- year- old gets an ex­tra $ 29,700 ($ 16,500).

ASFA chief ex­ec­u­tive Martin Fahy said the num­bers high­lighted the power of com­pound in­ter­est over many years. “Even small amounts can make a big dif­fer­ence in the long term,” he said.

Dr Fahy said last month’s su­per­an­nu­a­tion rule changes did not neg­a­tively af­fect most peo­ple’s su­per. “We en­cour­age peo­ple not to be put off, and have con­fi­dence in the sys­tem – it’s still the best way to save,” he said.

ASFA is a key sup­porter of this year’s Su­per Booster Day cam­paign, which runs un­til Septem­ber 15 and aims to high­light the long- term ben­e­fits of mak­ing ex­tra con­tri­bu­tions to su­per­an­nu­a­tion.

Salary sac­ri­fice al­lows work­ers to save tax be­cause their money goes into su­per be­fore their mar­ginal tax rate – of up to 47 per cent – is ap­plied. Lower in­come work­ers can en­joy even big­ger ben­e­fits through the Fed­eral Gov­ern­ment’s su­per co­con­tri­bu­tion, where af­ter- tax de­posits into su­per at­tract a $ 500 gov­ern­ment in­jec­tion an­nu­ally for any­one earn­ing be­low $ 36,813 a year and pay­ing in $ 1000.

A smaller co- con­tri­bu­tion is paid for peo­ple earn­ing up to $ 51,813.

Fi­nan­cial strate­gist Theo Mari­nis said for a young worker, an ex­tra $ 20 a week into su­per now would be worth al­most $ 4500 a year in bonus re­tire­ment in­come.

“You give up one cof­fee a day and then you get $ 4500 a year ex­tra in re­tire­ment and can buy every­body cof­fees,” he said.

“If your cir­cum­stances change you can pull back, and when your cir­cum­stances im­prove you can up it.”

Mr Mari­nis said peo­ple were put off by the con­stant changes to su­per rules. “I have been in this game for 30 years and there have been changes to the rules for 30 years. If you kept putting it off, you would have missed out on a lot of ben­e­fits,” he said.

Mak­ing au­to­matic pay­ments through di­rect deb­its worked best for most peo­ple, he said. “You won’t even no­tice it, but you will cer­tainly no­tice it in 30 years’ time.”

BOOST: Martin Fahy says small amounts make a dif­fer­ence.

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