Financial Advisors & Planners Perth I Westmount Financial I Rick Maggi

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Should you Salary Sacrifice into Superannuation?

Salary sacrifice into superannuation can be a good strategy for some individuals, but it ultimately depends on your personal financial situation and goals. Here are a few things to consider when deciding whether to salary sacrifice into superannuation:

  1. Tax benefits: By salary sacrificing into superannuation, you may be able to reduce your taxable income and lower your overall tax bill. Additionally, contributions to superannuation are taxed at a lower rate than your marginal tax rate.

  2. Retirement savings: Superannuation is designed to help you save for retirement. By salary sacrificing into superannuation, you can boost your retirement savings and potentially have a more comfortable lifestyle in your later years.

  3. Concession contribution: Keep in mind that if you are over 50 years of age, you may be able to make extra contributions under the government's ‘bring forward’ rules and also, if your income is below a certain threshold, you may be eligible for government co-contributions.

  4. Financial priorities: Before you decide to salary sacrifice into superannuation, it's important to make sure that you have enough money to cover your immediate financial needs and priorities, such as paying off debt or building an emergency fund.

  5. Impact on cash flow: Salary sacrificing into superannuation will reduce your take-home pay and therefore, you should make sure you can afford the reduction in your take-home pay before making the decision.

It is always a good idea to consult with a financial advisor or accountant to help you understand the tax implications and to make sure that salary sacrificing into superannuation is the right move for your individual financial situation and goals.