There is such a thing as a free lunch

The Federal government is waiting to give your super a $500 boost... come and get it!

- VITA PALESTRANT

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.