Salary sacrificing is the best way to go

At 54, Janet wants to start investing in the sharemarket.

QI’m 54, recently divorced and plan to retire at 60. I will have good super. I work three days a week and find it covers my expenses, living modestly. I don’t have a mortgage.

My question is: Is it too late to start investing in shares, since the sensible advice is that it is a long game? Or should I put extra money into superannuation?

The answer is no and yes, Janet. Except we are going to link shares and super together.

It is certainly not too late for you to be investing in growth assets such as shares. Yes, it is only six years to your retirement, but the whole idea of super is to have it generate annual returns for you, hopefully for decades. This means having shares in your super, as part of a diversified portfolio, is exactly what you should do. I'm hoping you will be able to add to your super and have shares as part of your super fund.

Super is just a tax structure, but a brilliant one. I'll need you to check your income, because that links directly to the right answer for you. You have told me you only work part-time, but as it is three days a week, I would think you would be earning more than $18,200. This where tax cuts in at 19% (16% from July 1). If you salary sacrifice into super, you would pay 15% tax, which makes super slightly tax effective for you as money goes in. Then you only pay 15% tax on the income earned inside super. If you earn more than $45,000, above that amount tax is 32.5% plus Medicare (30% from July 1). You would basically halve your tax on any super contributions made on amounts above that.

Have a chat to your accountant, super fund or your company's HR team. I think, though, you will find salary sacrificing into a super fund that holds a balanced or growth portfolio is likely to be a great option.