If you earn less than $43,445, the Federal government will give you $500 when Lyou make an after-tax contribution of $1000 to your super account. That's a 50% return, risk free, just for boosting your super balance. It's likely to be the best return on investment you'll ever get.
The government's super co-contribution is aimed at helping low- to middle-income earners lift their retirement savings. But many people are unaware of it and therefore miss out.
"If you qualify, the government will contribute 50 cents to your super for every $1 of personal [after-tax] contributions you make, up to a maximum of $500," says Marianne Walker, chief member officer and deputy CEO of Cbus Super, one of Australia's largest funds.
"If your total income is less than $43,445 you will get the full amount. This gradually reduces as your income increases, cutting out completely at $58,445. These thresholds are indexed every year." People eligible for the co-contribution are often in their 20s and 30s, busy building their careers or working part-time because of family commitments.
It's often a time when money is tight, and locking away contributions until retirement can be challenging.
Nevertheless, financial advisers point out that the more you contribute to super in your early years, the greater its impact will be when you retire, thanks to the power of compounding.
And every little bit counts (see case study, right).
"Obviously, the earlier you start saving for super, the more you'll have at the end of the day," says Colin Lewis, head of strategic advice at Fitzpatricks Private Wealth.
But he says people in their 20s and 30s don't think it makes sense because of other priorities.
"The one thing that does make sense is the government co-contribution.
Esta historia es de la edición December/January 2023 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición December/January 2023 de Money Magazine Australia.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 8500 revistas y periódicos.
Ya eres suscriptor? Conectar
Is the public market shrinking?
Australia needs a healthy stock market to give companies access to funds and to allow retail investors to build wealth.
India: three steps to transformation
Massive investment and extensive reforms turbocharge the economy.
The ballet of business
Changing direction, products, models and marketing is a hard task for a business. We chart what it takes to turn a business around, plus profile four successful pivots.
Save money and the planet
Could the high cost of living give us the incentive we need to reduce how much water and energy we use or waste? These eco-friendly household tips will help you do just that.
AI adoption is the new black
Artificial intelligence is set to reshape the commercial world, and small enterprises can’t afford to miss the boat.
Spam attack! Murky laws jam our inboxes
Unwanted marketing material is one of the pain points of modern life.
From rags to riches in style
Rich Tran sported a bowl cut until he was 14 years old and had no intention of becoming a hairdresser.
New work deals are killing the 'old' office
The Covid pandemic and the subsequent lockdowns accelerated the trend to more people working from home. It was a mixed experience.
Points taken: the truth about rewards
Can hopping between credit cards really boost your frequent flyer haul and give you cheap or free travel - or is it doing more harm than good behind the scenes? Money puts it to the test.
Shortcuts to own a home
Innovative ideas with a focus on low costs and sustainability could help solve the housing crunch.