Salary sacrifice is a no-brainer

Q I’m 40 years old, married with two kids. I earn $200,000 a year, have paid off my home and have a $150,000 interest-only investment loan. The net value of the two homes is $2.5 million and my super is at $350,000. My wife looks after the kids and she has $50,000 in super.

Now what do I do? My first choice is salary sacrifice into super at the maximum pre-tax rate and to top it up further post-tax with any extra cash flow from my rental property. Is this too early to go “all in” with super? Thanks, Troy, you have made things pretty easy for me. At 40 you are in great shape financially. I reckon that making the maximum contributions into super via salary sacrifice is a no-brainer. On the top part of your income you will be paying, including the Medicare levy, some 48% tax. But given that from July 1, 2017, $25,000 a year is the maximum we can put into super before tax, you will be pretty limited.

You are correct in saying that you can add your own money into super post-tax either now or after July 1. The amount you can put in drops under the new rules but it is still significant. With the 15% rate of tax inside super for a non-retiree, it is still a great place for you to add your own money and build a pool of investments.

The only downside is that you can’t access it until later in life. With two properties now, I really don’t see any other downside in super. If property investment is your thing, you could look at a DIY super fund where you could borrow to buy property if you wished. Personally, I reckon building your super in local and overseas shares is a good diversification for your current property holdings.