Rising Tide Blog

Time to make some sacrifices?

Posted by Matt Hale

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According to the Department of Social Services, a recent report showed that 77% of Australians over the age of 65 receive some form of income support.

Read the Pension Review Background Paper

I’m curious to know your thoughts about the following. How does an ageing population with less tax-payers (people that are working) than tax-takers (people on government support) continue to be supported, and is there anything you can you do about it?

One simple way that you can take some control back and make positive impacts to your future cash flow (as I mentioned last week) is to salary sacrifice.

Salary what?

Basically, salary sacrifice is when you tell your employer to take some of your hard earned and put it straight into your super before it hits your bank account.

So, why would you do that? Well, here are some good reasons.

Less tax – unless you earn under $18,200, salary sacrifice will be taxed less than your current wage.

Compound interest – if you invested $100 every month for 25 years, you would end up with $59,551 before tax (if you received an average 5% return). That’s $30,000 in, $59,551 before tax out.

Forced scarcity – if you don’t have it, you can’t spend it. 

If you think you could sacrifice a little bit today, to make your vision of freedom more achievable down the track – we recommend that you think about salary sacrifice as a part of your investment strategy.

P.S. this isn’t right for everyone, and your circumstances are different to everyone else’s.
Saying that, let someone at Rising Tide know if you would like to explore it (and hopefully keep Centrelink at bay).