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Can I Salary Sacrifice My Way to a Million Dollar Retirement? · She's On The Money

0:00
Speaker 1: She's on the Money.
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Speaker 2: She's on the Money. My name's Tatasha Bamblet.
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Speaker 3: I'm a proud First Nations woman and I'm here to
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Speaker 3: acknowledge country. Hello, beautiful friends, we gather on the lands
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Speaker 3: of the Aboriginal people. We thank, acknowledge and respect the
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Speaker 3: Aboriginal people's land that we're gathering on today. Take pleasure
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Speaker 3: in all the land and respect all that you see.
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Speaker 3: She's on the Money podcast acknowledges culture, country, community and connections,
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Speaker 3: bringing you the tools, knowledge and resources for you to thrive.
0:32
Speaker 1: Hello and welcome to another deep dive episode of She's
0:35
Speaker 1: on the Money, the podcast that helps you feel more
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Speaker 1: in control of your financial future, even if that future
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Speaker 1: seems years or even decades away. I'm back side and
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Speaker 1: enjoining me today is the brilliant Victoria Divide to discuss
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Speaker 1: the topic that affects us all, well, everyone living in Australia.
0:49
Speaker 1: Of course, I'm talking about super annuation, super annuation, super annuation.
0:55
Speaker 2: I say superannuation, but there's no innuation, but there's no
0:59
Speaker 2: B superannuation graduation.
1:01
Speaker 1: When I say super annuation.
1:03
Speaker 2: I mean you you enunciated correctly.
1:06
Speaker 1: Oh that's the first time've ever well.
1:08
Speaker 2: Done, well done. I don't know if that's the right way,
1:11
Speaker 2: because you know, like how some words, I know? Yeah, anyway, advertisement,
1:16
Speaker 2: so that's a different story, or like some American states, Yes,
1:22
Speaker 2: I can't, I can't anyway, too.
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Speaker 1: Many pronunciations or potential What about superannuation? Okay, so well,
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Speaker 1: more specifically, how one might get their super to work
1:32
Speaker 1: harder for them in the long run through salary sacrificing
1:35
Speaker 1: a sexy because if we've learned anything it's that we're
1:38
Speaker 1: often rewarded for the duration of our investments, not simply
1:42
Speaker 1: the amounts we contribute.
1:43
Speaker 2: You have learned a lot. I obviously I am obsessed
1:48
Speaker 2: with superannuation. I love talking about it. I love being
1:51
Speaker 2: involved in it. I love being able to calculate at
1:53
Speaker 2: the end of our financial year how much additional I'm
1:56
Speaker 2: able to contribute to like make my cap which which
2:00
Speaker 2: is just really fun but it's an absolute privilege to
2:03
Speaker 2: be able to do so. But at the same time,
2:07
Speaker 2: right now, money is really hard for people. Yeah, and
2:09
Speaker 2: I'm finding that conversations about superannuation are slipping and we
2:14
Speaker 2: need to be bringing them back to the forefront. Because
2:16
Speaker 2: if you've got no cash and you've got you know,
2:18
Speaker 2: a really strict budget and you're just really scraping by
2:22
Speaker 2: getting your super in order is something that you can
2:24
Speaker 2: usually do for free to put future you in a
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Speaker 2: better financial position so that you don't have to be
2:29
Speaker 2: as stressed and you're still making money. Yes, like you
2:32
Speaker 2: can still make your money work for you irrespective of
2:35
Speaker 2: the situation that you're in right now.
2:37
Speaker 1: That's so true, and knowing that kind of makes you
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Speaker 1: feel really empowered, even if you are kind of living
2:41
Speaker 1: paycheck to paycheck. So well, I feel like we've discussed
2:44
Speaker 1: superannuation a few times on the podcast, but I'm not
2:46
Speaker 1: sure if we've covered just how impactful salary sacrificing can
2:49
Speaker 1: be depending on when you start. And I know a
2:51
Speaker 1: bunch of people in.
2:52
Speaker 2: Our community will want to know how it works exactly,
2:54
Speaker 2: And I think I'll be really honest with you here.
2:56
Speaker 2: When I first started Ches on the Money, I was
2:59
Speaker 2: not in the financial position to be able to salary sacrifice.
3:02
Speaker 2: In fact, once I went out on my own and
3:05
Speaker 2: was a sole trader, I wasn't even paying myself any superannuation,
3:09
Speaker 2: even though I was on the podcast saying small business
3:11
Speaker 2: owners need to be paying their super because it's more
3:14
Speaker 2: of a do as I say, not as I do moment.
3:16
Speaker 2: Like I knew I was doing the wrong thing at
3:18
Speaker 2: the time, but I also didn't want to tell you
3:21
Speaker 2: that because I didn't want to give you the permission
3:24
Speaker 2: to be like, oh, it doesn't matter. But I think
3:26
Speaker 2: in hindsight, it's important to talk about this stuff too,
3:30
Speaker 2: because if you're a small business, or if you're a
3:33
Speaker 2: sole trader, or if you're not able to salary sacrifice,
3:35
Speaker 2: I knew just have a salary and pay as you
3:37
Speaker 2: go job, and you feel bad about it, you shouldn't. Yeah,
3:42
Speaker 2: because we're all going through different seasons of life, and
3:44
Speaker 2: sometimes it's harder and sometimes it's not. But I know
3:48
Speaker 2: unequivocally that the time and the energy and the effort
3:51
Speaker 2: that I spent researching and understanding my super and learning
3:55
Speaker 2: about it helped me build the investments that I have
3:58
Speaker 2: today and helped me be able to identify when I
4:02
Speaker 2: was in a good position to actually be able to
4:04
Speaker 2: contribute to that, because if I didn't know, and I
4:07
Speaker 2: just kept putting off these salary conversations and these super
4:10
Speaker 2: conversations until you know, maybe I had enough money. How
4:13
Speaker 2: do you know when you have enough money? Yeah, if
4:15
Speaker 2: you haven't already done the research and understood and waited
4:18
Speaker 2: for a period of time where it's identified itself.
4:20
Speaker 1: Right right.
4:21
Speaker 2: So even if you're listening to this and you're thinking, Victoria, divine,
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Speaker 2: I do not earn enough, or I don't have room
4:28
Speaker 2: in my budget, I can't be adding to my super.
4:30
Speaker 2: Stop putting pressure on me, girl. I'll take the pressure off,
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Speaker 2: I don't mind, just by listening to this episode and
4:35
Speaker 2: seeking out different ways that you could potentially do it
4:38
Speaker 2: when you do have some extra casholder, you're already investing
4:41
Speaker 2: in your financial future. You're already putting future you first.
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Speaker 2: And that's really sexy, that's really cool. So I guess
4:48
Speaker 2: like research is part of the decision making. So how
4:51
Speaker 2: deep are we going to go today? Okay, So firstly,
4:54
Speaker 2: we're going to break down exactly what salary sacrificing is,
4:57
Speaker 2: what it means, how it works, why it's so lucrative,
5:00
Speaker 2: and how much you might want to be investing now
5:03
Speaker 2: so that you can end up with maybe having a
5:05
Speaker 2: million dollars in your super by the time that you retire. Crazy,
5:08
Speaker 2: but before all of that, miss becksay ed, Yes, a
5:11
Speaker 2: tiny coffee break, if you will I will welcome back
5:18
Speaker 2: to my friends. Now. I do not want to tell
5:20
Speaker 2: this community how to suck an egg, but I do
5:23
Speaker 2: know a fair bit about finance. In fact, you could
5:27
Speaker 2: say it's my hyperfixation. You could say I'm obsessed with it.
5:30
Speaker 1: You could say, yeah, like I live.
5:32
Speaker 2: And breathe money, but more specifically helping our community get
5:37
Speaker 2: rich and that's really fun. But I feel like it
5:42
Speaker 2: might be helpful if in this episode we just go
5:45
Speaker 2: back to basics and I explain what salary sacrificing is
5:49
Speaker 2: from the top. I think a little refresher would be good, good, good,
5:53
Speaker 2: all right, So Beck, the second you get your job,
5:57
Speaker 2: first job, you're signed up to a super fund. I
5:59
Speaker 2: think we all remember the first job that we got
6:02
Speaker 2: and being handed a stack of forms and most of
6:05
Speaker 2: them not making sense. But what you probably understood was
6:08
Speaker 2: which bank account do you want the cash holder to
6:11
Speaker 2: go into? And you were like, this is a money win. So.
6:15
Speaker 2: Surbnuation is a compulsory system that was originally set up
6:20
Speaker 2: in nineteen ninety two to help provide Australians with financial
6:23
Speaker 2: support during retirement and to reduce Australia's reliance on the
6:28
Speaker 2: aged pension. So Before this, lots of people were retiring
6:32
Speaker 2: and just relying on the government to pay them an
6:35
Speaker 2: income to live. Right, But because of population growth, because
6:39
Speaker 2: of how much our community is expanding, that reliance was
6:43
Speaker 2: increasing so significantly that we were going to run out
6:46
Speaker 2: of all of the money. So we needed to find
6:49
Speaker 2: a better way, and subnuation was introduced. Right. So, back
6:52
Speaker 2: when I got my first job, it was nine point
6:54
Speaker 2: five percent. Since then it has increased to twelve percent.
6:59
Speaker 2: So basically, every single pay that you get, beck a
7:03
Speaker 2: little portion of it that twelve percent, to be exact,
7:06
Speaker 2: goes towards your post retirement self. And this is the
7:09
Speaker 2: superranuation guarantee. So superranuation guarantee is the minimum amount that
7:15
Speaker 2: needs to be contributed to your superfund from an employer. Right.
7:20
Speaker 2: But salary sacrificing is when you choose to have an
7:25
Speaker 2: additional contribution directed from your income, so you say to
7:29
Speaker 2: your employer, please put some more money into my super
7:33
Speaker 2: before tax hits. What this does is a number of things.
7:36
Speaker 2: Obviously you're contributing more to your retirement, but it does
7:40
Speaker 2: lower your overall taxable income, and the amount that goes
7:44
Speaker 2: into super is only taxed at fifteen percent instead of
7:47
Speaker 2: your marginal tax rate, which most people in our communities
7:51
Speaker 2: sit on about thirty percent. So obviously that's some nice
7:54
Speaker 2: initial savings. But essentially superanuation is not an investment, Beck,
8:02
Speaker 2: and you would be like, wait, what didn't you just
8:03
Speaker 2: say it was an investment, of Victoria.
8:05
Speaker 1: That's what I'm thinking.
8:06
Speaker 2: Yeah, Like, are you, you know, contradicting yourself, Victoria. No,
8:10
Speaker 2: because superranuation is just the vehicle, right, So you have
8:14
Speaker 2: to put your money into some form of superanuation like
8:18
Speaker 2: a car. You could buy a Toyota, you could buy
8:21
Speaker 2: a Hianda, you could buy a Mercedes. It like, they're
8:25
Speaker 2: just different brands of car, right, Yeah, but what you're
8:28
Speaker 2: putting in the car and how you get from A
8:30
Speaker 2: to B is going to be different. So superranuation is
8:34
Speaker 2: the system, and then in the system you take that
8:38
Speaker 2: money and you invest it. So your superranuation isn't the investment.
8:42
Speaker 2: Your supranuation is the tax vehicle, and then the investment
8:46
Speaker 2: is what happens in the car and who you collect
8:48
Speaker 2: along the way. Okay, yes, so that tax vehicle can
8:52
Speaker 2: be used to help reduce the amount of tax that
8:54
Speaker 2: you pay on your income, which is arguably I don't know,
8:57
Speaker 2: a little bit sexy. Yeah, less tax in my head,
9:00
Speaker 2: more better.
9:01
Speaker 1: So thousand dollars outside of Like, let's say you put
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Speaker 1: a thousand bucks in salary sacrificing and go straight to
9:07
Speaker 1: your SuPAR fifty percent tax of that. Yeah. Then if
9:10
Speaker 1: you don't do that and it goes straight into your
9:12
Speaker 1: bank account, that's thirty percent. It's tax. Yeah.
9:14
Speaker 2: So on one thousand dollars, that would be three hundred
9:17
Speaker 2: dollars tax that you pay if you were to have
9:20
Speaker 2: it hit your bank account, so you would only get
9:22
Speaker 2: what's seven hundred dollars, but you would get eight hundred
9:26
Speaker 2: and fifty inside the superannuation environment.
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Speaker 1: God, that's good. Okay, So can you run me of
9:31
Speaker 1: the tax we're paying at some of the lower brackets.
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Speaker 2: So according to the current income year, which we are
9:37
Speaker 2: now in the twenty twenty six twenty twenty seven financial year.
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Speaker 2: But if you earn less than eighteen thousand, two hundred
9:46
Speaker 2: dollars in one year, you meet the tax free threshold
9:50
Speaker 2: and you don't earn enough money to be paying tax.
9:53
Speaker 2: So you'll get all of those dollars into your account, right, Yeah,
9:57
Speaker 2: But if you earn more than that, but under four
10:00
Speaker 2: five thousand dollars, your income will be taxed at a
10:03
Speaker 2: rate of fifteen percent, So that's the same tax rate
10:07
Speaker 2: that's inside superannuation. If you earn more than that, but
10:11
Speaker 2: under one hundred and thirty five thousand dollars per year,
10:14
Speaker 2: you will be taxed at thirty percent, which is where
10:18
Speaker 2: most of our community see it's based on everything that
10:21
Speaker 2: I've surveyed them on, right, so you can kind of
10:24
Speaker 2: see how stashing extra money in your super becomes a
10:27
Speaker 2: little bit sexy, right, especially with the more money that
10:31
Speaker 2: you earn.
10:31
Speaker 1: Yes, absolutely so, if you've already been taxed at thirty
10:35
Speaker 1: percent or more, why not put some of that money
10:37
Speaker 1: towards your super? Where are we taxed it less? And
10:39
Speaker 1: also help you in the future.
10:41
Speaker 2: I think it's a good deal. And benk, you might
10:43
Speaker 2: find that by salary sacrificing something like just five percent
10:47
Speaker 2: of every pay could benefit you in the immediate future
10:50
Speaker 2: by lowering your tax rate without crushing your cash flow.
10:54
Speaker 2: But you really need to be working that out based
10:56
Speaker 2: on your earnings and your tax and your contributions and
10:59
Speaker 2: what your financial see situation looks like. And this is
11:02
Speaker 2: like a point in time where I really wish that
11:06
Speaker 2: I had listened to my dad, because growing up, my
11:10
Speaker 2: dad said, Victoria, always save five percent of your income
11:15
Speaker 2: and pretend it didn't exist. And this is something that
11:18
Speaker 2: I'm going to be teaching my kids as they get
11:20
Speaker 2: a bit older, Like when they get their first jobs,
11:22
Speaker 2: I'm going to be like, let's pretend you didn't even
11:24
Speaker 2: get that five percent, and it either goes straight into
11:26
Speaker 2: an investment, straight into savings, or straight into your like
11:29
Speaker 2: super because if I took five percent of you from
11:32
Speaker 2: the very beginning of your working life and you always
11:35
Speaker 2: just operated on the basis that you were earning five
11:38
Speaker 2: percent less than what you actually were, you never actually
11:42
Speaker 2: ended up spending that five percent, Yes, and you're consistently investing.
11:46
Speaker 2: And like, had you done that to me at fourteen
11:49
Speaker 2: years and nine months when I got my first job,
11:52
Speaker 2: I would be in a significantly better financial position than
11:55
Speaker 2: I am today in saying that my dad did tell
11:59
Speaker 2: me that at fourteen years and nine months, and because
12:02
Speaker 2: I was fourteen years and nine months, I knew better, right,
12:06
Speaker 2: So I think it's it doesn't matter if you did
12:08
Speaker 2: or you didn't. But like if I was teaching kids
12:10
Speaker 2: about money, or if I had some you know, free
12:13
Speaker 2: cash flow, and I really wanted to set myself up
12:15
Speaker 2: for success. And I was like, oh, well, I am young,
12:19
Speaker 2: and you know you're in this situation. Beck, if I
12:21
Speaker 2: started taking five percent off you, I just know that
12:24
Speaker 2: you'd adjust your your like your living situation and like
12:27
Speaker 2: the way that you spend without compromising your lifestyle for sure.
12:31
Speaker 2: So I'm kind of like, well, if I was in
12:33
Speaker 2: a financial position to do that, maybe I would choose to.
12:36
Speaker 2: So I think it's important that if you could change
12:39
Speaker 2: your situation, you think about what you can do for
12:42
Speaker 2: future you as well, even though it's like not that
12:45
Speaker 2: sexy because there's no immediate like whill I just got
12:47
Speaker 2: a new shoe, Like, do you know what I mean? Yeah?
12:49
Speaker 1: I know you mean, I know what you mean. So
12:52
Speaker 1: is there like a ceiling? Like what if you do
12:53
Speaker 1: earn more than one hundred k year? Yeah, can you
12:56
Speaker 1: just throw like fifty five thousand dollars into Suva if
12:59
Speaker 1: you happen to have that extra money so you end
13:01
Speaker 1: up reaching a lower tax bracket.
13:03
Speaker 2: I love that You've just been like, well, if you
13:05
Speaker 2: earn more than one hundred grand a year, you would
13:07
Speaker 2: just have fifty five grand laying around obviously my queen like,
13:11
Speaker 2: that's crazy amounts of money, but also very good question.
13:15
Speaker 2: And as of this financial year, the most you're allowed
13:19
Speaker 2: to contribute in addition to your compulsory payments is thirty
13:24
Speaker 2: two five hundred dollars okay, So like, if you want
13:27
Speaker 2: to make an extra payment, it is capped so that
13:30
Speaker 2: you can't basically put your entire salary in there. And
13:34
Speaker 2: the Australian tax system that's why they are doing that.
13:38
Speaker 2: And they're also like, well, we want you to be
13:40
Speaker 2: well off in retirement, but we also don't want you
13:42
Speaker 2: to take the mickey out of the tax system. So
13:45
Speaker 2: let's say that you haven't hit the cap in the
13:47
Speaker 2: last five years as well. And this is something full
13:50
Speaker 2: transparency I took advantage of in the last financial year because,
13:57
Speaker 2: as I said, everything else in my life has been
13:59
Speaker 2: a already, Like when my husband and I were saving
14:02
Speaker 2: for our first home, contributing extra to my super didn't
14:05
Speaker 2: make sense because I was like, well, i'd have less
14:07
Speaker 2: money for the house that we're purchasing, and in this
14:10
Speaker 2: economy back absolutely not. And then for a lot of
14:14
Speaker 2: my working life or for the last i'd say five years,
14:17
Speaker 2: as much money as possible has been going back into
14:21
Speaker 2: my businesses. So like, I think a lot of people
14:24
Speaker 2: would be surprised at how much I don't take out.
14:26
Speaker 2: They'd be like, oh, well, we thought you would have
14:28
Speaker 2: this stupidly high salary. And I mean, beck, I earn
14:30
Speaker 2: good money, but where I can, I'm leaving as much
14:34
Speaker 2: money as possible in the business so I can hire
14:36
Speaker 2: new people or invest in different resources and like grow
14:39
Speaker 2: and sustain my businesses. So my superl is looking a
14:42
Speaker 2: little bit sad, sure, And so I sat down and
14:45
Speaker 2: I spoke to my accountant, and I said, how much
14:48
Speaker 2: carry forward have I got? So let's say that you
14:52
Speaker 2: know you haven't hit your cap in that last five
14:54
Speaker 2: years like I hadn't. You might be able to carry
14:57
Speaker 2: forward any of your unused cap amounts okay, and then
15:01
Speaker 2: make higher contributions as like a once off situation. But
15:04
Speaker 2: your superbalance has to be under five hundred thousand dollars
15:07
Speaker 2: to do this, and mine was too, Like mine was
15:10
Speaker 2: not looking as good as it definitely could. And so
15:14
Speaker 2: I was able to take some of out like Steve
15:16
Speaker 2: and my savings and put it into my super because
15:19
Speaker 2: I was like it, now's the time for me and like,
15:22
Speaker 2: as much as I want access to my cash, I
15:25
Speaker 2: also need to make sure that future me is really
15:27
Speaker 2: looked after.
15:28
Speaker 1: Gotcha. It's like rollover data.
15:30
Speaker 4: Yes, yes, it is literally like rollover data for your SUPER.
15:33
Speaker 1: I see, I see. Okay, So hypothetically, if my super
15:37
Speaker 1: balance is that seventy k yeah, and I've only just
15:39
Speaker 1: started salary sacrificing, you're saying I might be able to
15:42
Speaker 1: put an extra forty thousand dollars into super this year
15:44
Speaker 1: because I haven't hit the cap leading up to it. Yeah. Absolutely, Okay, I'm.
15:50
Speaker 2: That crash, like absolutely, and I mean not everybody is
15:53
Speaker 2: contributing to their super to the max amounts, so it's
15:56
Speaker 2: definitely worth working out. And on a lot of your
16:00
Speaker 2: superranuation website, you'll be able to log into your account
16:03
Speaker 2: and have a look at what carry forward you might have,
16:06
Speaker 2: so you might not even have to talk to an
16:08
Speaker 2: accountant or a financial advisor. Your super website might actually
16:11
Speaker 2: have the calculator there for you because they have all
16:13
Speaker 2: the information on your financial situation.
16:16
Speaker 1: Right right right right Okay. So and besides like paying
16:19
Speaker 1: less tax and putting money towards retirement, are there any
16:22
Speaker 1: other benefits to salary sacrificing.
16:24
Speaker 2: Besides it being a very sexy tax vehicle.
16:27
Speaker 1: That's all these beautiful leggs.
16:28
Speaker 2: The first time super Savior scheme. So if you're looking
16:30
Speaker 2: to purchase your first home, there's actually a scheme that
16:34
Speaker 2: exists in every single Australians superranuation already and it is
16:40
Speaker 2: the first time super Savior scheme, which is a mouthful
16:42
Speaker 2: but a very cool scheme. So basically, you can contribute
16:46
Speaker 2: up to a maximum of fifteen thousand dollars every year,
16:51
Speaker 2: up to a total of fifty thousand dollars across all
16:55
Speaker 2: years to this scheme. And what that means is that
17:00
Speaker 2: you will be able to put that money into your
17:03
Speaker 2: super and benefit from that tax offset. So instead, and
17:08
Speaker 2: you know how we went back to that thousand dollar example.
17:11
Speaker 2: If you're saving for your first home, every couple one
17:13
Speaker 2: hundred dollars matters, right, But if you put one thousand
17:16
Speaker 2: dollars into your personal savings and you were taxed at
17:19
Speaker 2: that thirty percent that you and I were talking about before, yeah,
17:22
Speaker 2: seven hundred dollars into your savings, true, true, true. If
17:25
Speaker 2: you put that into your first home super Saver scheme
17:28
Speaker 2: eight hundred and fifty dollars into your savings and if
17:32
Speaker 2: you're really clear on your goals and you're like, well, Victoria,
17:34
Speaker 2: I really want to buy a house. Which one makes
17:37
Speaker 2: more sense mathematically?
17:40
Speaker 1: Genius?
17:40
Speaker 2: Which one? Are you going to end up with more
17:42
Speaker 2: cash in? Well? And obviously that extrapolates out for every
17:46
Speaker 2: ten thousand dollars that you save, instead of it being
17:50
Speaker 2: seven thousand dollars in your savings account, that's eight thousand,
17:55
Speaker 2: five hundred in super.
17:57
Speaker 1: Yes.
17:57
Speaker 2: True, So like genius, the more that you get, the
18:01
Speaker 2: more impact that it has. And if you're going to
18:04
Speaker 2: do this properly, like you're going to end up in
18:07
Speaker 2: a better financial situation. And like not all of us.
18:10
Speaker 2: I don't know many people, especially in the she's on
18:12
Speaker 2: the money community, that are actually saving more than fifteen
18:16
Speaker 2: thousand dollars per year towards their first home in this
18:18
Speaker 2: economy for sure, So like I feel like that's reasonable totally.
18:22
Speaker 1: And you get also the super that remains once you
18:25
Speaker 1: take out that money that you've put in. Yeah, it
18:27
Speaker 1: gets all the interest that.
18:29
Speaker 2: That costs exactly yea. And I mean I am all
18:32
Speaker 2: for championing a woman buying a house on their own,
18:36
Speaker 2: but hypothetically if you're buying with a partner, that fifty
18:39
Speaker 2: thousand dollars cap becomes one hundred thousand dollars across both
18:42
Speaker 2: of your your supers, so you've got one hundred grand,
18:46
Speaker 2: which means you could be much better off financially if
18:49
Speaker 2: you use the system, And if you're going to do
18:51
Speaker 2: it properly, please just I'm just all about dotting your
18:55
Speaker 2: eyes and crossing your t's because technically any additional contribution
18:59
Speaker 2: that you make to your super fits this scheme, but
19:02
Speaker 2: every super fund is different, right, So if you're going
19:06
Speaker 2: to do this, please just like call your super fund,
19:08
Speaker 2: have a chat with them, or log in online and
19:10
Speaker 2: request what's called a first Home super Savior scheme determination
19:15
Speaker 2: before owing and like planning for the property. So all
19:18
Speaker 2: you have to do to get the money back out
19:20
Speaker 2: of your super is feel in a form and it
19:22
Speaker 2: might look different for different super funds, but feel in
19:25
Speaker 2: a form. They will release the amount and then you
19:27
Speaker 2: buy the property.
19:28
Speaker 1: God, that's so good.
19:29
Speaker 2: And you can like talk to your bank about where
19:31
Speaker 2: your like home deposit is sitting, Like you can come
19:33
Speaker 2: and talk to a broker and be like, yeah, I'm
19:36
Speaker 2: using the first Home super Savior scheme, and we can
19:38
Speaker 2: see that in the same way that we can see
19:40
Speaker 2: your savings. It doesn't change anything. That's so so good,
19:43
Speaker 2: isn't it sexy? Yeah, that's really helpful. It actually blows
19:47
Speaker 2: my mind when I get first home buyers, you meet
19:51
Speaker 2: the criteria who are like, no, I can't be bothered.
19:53
Speaker 2: I'm like, babes, free money, free money, that's so good,
19:58
Speaker 2: makes so no sense, Like are we not meant to
20:01
Speaker 2: be using everything to our own advantage?
20:03
Speaker 1: Absolutely?
20:04
Speaker 2: At least what's there for? Well, that's what I thought.
20:07
Speaker 1: Well, I mean like technically it's going toward your future,
20:09
Speaker 1: and arguably having shelter might help you continue to earn
20:13
Speaker 1: money until retirement exactly.
20:16
Speaker 2: And there are some other circumstances where you might need
20:19
Speaker 2: access to your super early beck so like knock on
20:22
Speaker 2: wood that this never happens to you or anybody in
20:24
Speaker 2: our community, but you might need to access your supernuation
20:30
Speaker 2: on what they call compassionate grounds to pay for medical
20:33
Speaker 2: treatment for you or a dependent, or if a dependent
20:37
Speaker 2: passes away, super can be accessed to pay for like
20:40
Speaker 2: funeral costs, or to prevent the forced foreclosure of a
20:44
Speaker 2: sale of a home. That sort of thing. So those
20:47
Speaker 2: things suck, But like, how good that we can lean
20:50
Speaker 2: on that cash if we really need to, for sure,
20:52
Speaker 2: and it can also be accessed during times of extreme
20:56
Speaker 2: financial hardship. But there are a whole bunch of things
21:00
Speaker 2: that need to happen before you're legally allowed to access
21:03
Speaker 2: this money before retirement. And just because I said, oh,
21:06
Speaker 2: like financial hardship, like you could access your super and
21:09
Speaker 2: you might like have some bells dinging, like oh I
21:11
Speaker 2: could access that, no worries, Like if you can not
21:16
Speaker 2: do that, it's way better, Like I would be trying
21:19
Speaker 2: to avoid it at all costs. Yeah, but at the
21:21
Speaker 2: end of the day, like if it is extreme financial hardship,
21:24
Speaker 2: I'm very glad that you have access to that.
21:26
Speaker 1: Absolutely, And from memory, you have to be on sendling
21:29
Speaker 1: for like six months beforehand, you have to be in debt.
21:31
Speaker 2: I know.
21:31
Speaker 1: It's a whole thing.
21:32
Speaker 2: Yeah, there's a whole, very thing.
21:34
Speaker 1: Yeah, long list of things you got to tick off.
21:35
Speaker 2: So yeah, and like I think some people look at
21:37
Speaker 2: it and go, oh my god, like I would love
21:39
Speaker 2: to do that, and it's I don't know, it's like
21:41
Speaker 2: your financial future. And don't get me wrong, in the
21:44
Speaker 2: short term, it feels like it's like a band aid
21:46
Speaker 2: and you just rip it off and you take it
21:47
Speaker 2: and it like it just is what it is. But
21:50
Speaker 2: there are so many people who during COVID took money
21:53
Speaker 2: out of their superannuation because they made it much easier
21:56
Speaker 2: to do so. And don't get me wrong, lots of
21:59
Speaker 2: people ben fitted from it in the way that that
22:02
Speaker 2: scheme was intended to be benefited from. Yeah, but a
22:04
Speaker 2: lot of people were like, Oh, I can get cash
22:07
Speaker 2: out of my super. I'm just going to do that
22:09
Speaker 2: and now deeply regret it.
22:13
Speaker 1: One of those people, that's for sure, but.
22:15
Speaker 2: Like it wasn't And that's just like a whole side conversation.
22:18
Speaker 2: I feel like they're marketing around that. The conversations around that,
22:21
Speaker 2: they weren't like, hey, Beck, are you aware that like
22:24
Speaker 2: this is a really like negative thing to potentially do,
22:28
Speaker 2: like you basically saw it, and they were like, did
22:30
Speaker 2: you want Like the way that it felt from my
22:32
Speaker 2: perspective was, hey, Beck, do you want ten grand out
22:35
Speaker 2: of your super? And you were like sure, and they
22:38
Speaker 2: were like great, no worries, all you have to do
22:39
Speaker 2: is feel out this form and you were like, oh easy, thanks.
22:42
Speaker 1: Yeah, it's so true, Like that's what it felt like, yes, exactly,
22:47
Speaker 1: and you're like, what the hell?
22:48
Speaker 2: And now lots of people are like Victoria had I know,
22:51
Speaker 2: and I wish I hadn't done that, but like, don't
22:52
Speaker 2: crucify yourself. That's not the end of the world.
22:54
Speaker 1: That's very sweet, thank you. So okay, well, you know
22:57
Speaker 1: that was not good. It was not good. But hopefully
23:00
Speaker 1: we won't need to access like that earlier than retirement
23:06
Speaker 1: in the future. Hopefully no more pandemics where they're giving
23:11
Speaker 1: it away will and nearly exact fingers crossed. No one
23:13
Speaker 1: needs that that early access exactly.
23:17
Speaker 2: But let's also reframe that situation by asking the question,
23:21
Speaker 2: all right, Beck, how much money do you want to
23:24
Speaker 2: retire with?
23:24
Speaker 1: Yeah, it's a great one, Like I well, I always
23:28
Speaker 1: think a million, because you have said a million, and
23:30
Speaker 1: so I'm like, you.
23:32
Speaker 2: Don't need a million's that's a very large number that
23:35
Speaker 2: to be quite honest, most people in Australia do not
23:38
Speaker 2: retire this Like, that's not normal, Beck.
23:41
Speaker 1: Five hundred thousand, Like that's a good goal.
23:44
Speaker 2: I mean, you're young and hot and hopefully getting rich.
23:48
Speaker 2: But thank you, I feel like having a goal of
23:52
Speaker 2: a million dollars at your age is actually quite reasonable
23:55
Speaker 2: and puts you in a really good financial position. But
23:58
Speaker 2: I also am acute aware that a lot of people
24:00
Speaker 2: will be like, Victoria, that's unrealistic, And I'm like, well,
24:04
Speaker 2: I is it really unrealistic if people have done it before?
24:06
Speaker 2: Beck right, right, right, Like if other people can do it,
24:09
Speaker 2: we can do it. Yeah, Like how are good to
24:11
Speaker 2: be boys do it?
24:12
Speaker 1: Yeah?
24:12
Speaker 2: Like that's not that deep. No, But I think the
24:15
Speaker 2: conversation needs to change around retirement because if we look
24:20
Speaker 2: at like and we'll get into it, but like, if
24:23
Speaker 2: we look at what works out to be reasonable, it's
24:26
Speaker 2: a lot different to what I talk about on the
24:28
Speaker 2: podcast because like, as we know, the government believes that
24:33
Speaker 2: the Centerlink income is enough to live a good life.
24:37
Speaker 2: Would you say that it is? I would say definitely,
24:41
Speaker 2: not exactly. So, like the numbers that the government recommends
24:46
Speaker 2: are going to be the bare minimum, if that makes sense.
24:49
Speaker 2: They're going to be like, Okay, cool, you're not living
24:52
Speaker 2: in an area that you really want to live in.
24:53
Speaker 2: You're not putting the food on the table that you
24:55
Speaker 2: would really want to put on the table, Like, you're
24:57
Speaker 2: not having a life experience. Is that I believe you
25:00
Speaker 2: deserve and like that might be the life you want
25:02
Speaker 2: to lead, and like, pop off, queen, I'm here to
25:05
Speaker 2: give you options though and kind of help you see
25:08
Speaker 2: that maybe that might not be enough. But it also
25:12
Speaker 2: depends really heavily on the type of lifestyle you want
25:14
Speaker 2: in retirement. And when I was a financial advisor, I
25:17
Speaker 2: used to sit down with clients and be like, well,
25:19
Speaker 2: what does that look like? Like, Beck, are you going
25:21
Speaker 2: to buy a caravan and then you know, drive around
25:25
Speaker 2: Australia for your retirement and just stay at free camping
25:28
Speaker 2: locations and you know, put a few snags on the barbie?
25:32
Speaker 2: Or are we going to Europe every Christmas hour we
25:38
Speaker 2: you know, skiing in the Swiss Alps? Like what does
25:41
Speaker 2: that lifestyle look like? Because that's going to determine what
25:44
Speaker 2: you need. And obviously, if you're just gonna live, love,
25:48
Speaker 2: laugh around Australia, the income required for that is very
25:51
Speaker 2: different to someone who wants an international holiday of luxury
25:54
Speaker 2: every year. So let's get into some research. To the
26:00
Speaker 2: Association of Superannuation Funds of Australia, for a comfortable retirement,
26:06
Speaker 2: singles will need to have fifty five thousand, nine hundred
26:09
Speaker 2: and twenty three dollars a year during retirement. Well, couples
26:14
Speaker 2: apparently will need seventy eight thousand, five hundred and sixty
26:17
Speaker 2: six dollars to live a comfortable life. But this, again
26:24
Speaker 2: I think is outdated because this number presumes that you
26:28
Speaker 2: own the roof over your head and you aren't making
26:30
Speaker 2: mortgage or rent repayments.
26:32
Speaker 1: True, yes, yes, so like.
26:34
Speaker 2: That doesn't make sense in an economy where most millennials
26:37
Speaker 2: are now struggling to buy property. Most you know, gen
26:39
Speaker 2: zs are you know, maybe considering not even having that,
26:43
Speaker 2: so you might need more than that. So if you're renting,
26:46
Speaker 2: this figure is going to climb by about forty percent
26:49
Speaker 2: for you to have what they call a modest lifestyle.
26:53
Speaker 2: So that's not like a life of luxury. That's just
26:55
Speaker 2: like they're basics, everything's going well and caveat. I really
27:00
Speaker 2: just don't want this episode to be scary for people,
27:02
Speaker 2: because you do have so much time to fix things
27:05
Speaker 2: and so much time to put yourself in the best
27:07
Speaker 2: possible position. But these numbers are big and you can
27:10
Speaker 2: instantly be like, but Victoria, I only have thirty two
27:13
Speaker 2: thousand dollars in super What am I going to do? Girl?
27:15
Speaker 2: That's why we're besties. I got you. Yeah, Like it's okay,
27:18
Speaker 2: it's okay, it's okay. That's why you're here, right, because
27:20
Speaker 2: you want better for yourself and we're like building towards
27:23
Speaker 2: a more secure financial future. But if you wanted to
27:27
Speaker 2: look at this total super balance at retirement and you
27:31
Speaker 2: don't have a house, this works out to be roughly
27:34
Speaker 2: six hundred and thirty thousand dollars in superannuation for singles
27:37
Speaker 2: and seven hundred and thirty thousand dollars for couples. Now,
27:41
Speaker 2: when I say a comfortable retirement, I mean that you
27:46
Speaker 2: have enough money in order to have some occasional takeaway meals,
27:51
Speaker 2: maybe to go to the movies, to go to dance
27:55
Speaker 2: classes if you really want to, because like you know
27:57
Speaker 2: what happens when people retire, they're like do stuff they've
28:00
Speaker 2: never done before. Yeah, yeah, I love it. But also
28:03
Speaker 2: we need to pay for those experiences. It's true, comfortable
28:07
Speaker 2: means having enough coin to get, you know, a nice
28:09
Speaker 2: hack up pretty regularly, having a good level of private
28:13
Speaker 2: health insurance, and having enough money maybe for an overseas
28:17
Speaker 2: trip now and then. It's definitely not like if I
28:19
Speaker 2: look at the budgets. It's definitely not every year, but
28:22
Speaker 2: like you're not not going to have them. So that's
28:25
Speaker 2: where comfortable is looking. So now I kind of get
28:28
Speaker 2: why people are always aiming to retire on a million dollars. Yes,
28:31
Speaker 2: because that figure feels relatively safe and kind of with
28:35
Speaker 2: a buffer. Yes, seek, And that's why I often pick
28:38
Speaker 2: that million dollar figure, because I go, I know it's
28:40
Speaker 2: seven figures. I know it's really scary, but if you
28:44
Speaker 2: can work towards that, you're going to be quite comfortable.
28:47
Speaker 2: And if you are retiring with a partner, Beck, two
28:51
Speaker 2: million dollars do goldwen? Yeah? Okay, So I'm going to
28:55
Speaker 2: get a little bit further into that and what we
28:57
Speaker 2: might salary sacrifice to reach that goal at retirement right
29:01
Speaker 2: after this break, So guys don't go anywhere, all right,
29:08
Speaker 2: Miss Beck say, ed, have you digested all of the
29:11
Speaker 2: information that I have thrown at you so far?
29:13
Speaker 1: Yes? Yes, I have.
29:14
Speaker 2: We have covered the benefits, we've covered the definitions, we've
29:17
Speaker 2: covered you know why we might be looking at doing
29:20
Speaker 2: the maths on a million as opposed to five hundred thousand?
29:24
Speaker 3: Do you like?
29:25
Speaker 2: Okay? I now think that maybe a million is what
29:28
Speaker 2: I would like to aim for I'm going to aim.
29:30
Speaker 1: For it, but I like, hey, shoot for the stars.
29:33
Speaker 1: Shoot the stars, and maybe you will land on a
29:36
Speaker 1: moon or something they say.
29:38
Speaker 2: I think they say, shoot for the moon and you'll
29:40
Speaker 2: land among the stars. Oh, which makes a lot more sense.
29:43
Speaker 1: Yeah, I guess it does.
29:45
Speaker 2: We don't need to make sense, We need to make
29:47
Speaker 2: money exactly right, all right, back, So let's do a
29:51
Speaker 2: little example. Let's say that you are twenty four years
29:54
Speaker 2: old and you might have what seven grand in super
29:58
Speaker 2: sure you and let's say sixty four thousand dollars per
30:02
Speaker 2: year before tax, right, good example, your employer makes the
30:06
Speaker 2: compulsory twelve percent subrenuation contribution. That means that every year,
30:11
Speaker 2: seven six hundred and eighty dollars is going into your
30:14
Speaker 2: super Your salary sacrifice that you've chosen might be five
30:19
Speaker 2: percent of your gross and your income. Do you remember
30:22
Speaker 2: the difference between gross and net.
30:23
Speaker 1: Gross is in total? Yes, why, it's a gross amount
30:28
Speaker 1: of money.
30:29
Speaker 3: Yeah.
30:29
Speaker 2: To look at and what you're missing out on and
30:31
Speaker 2: what you're missing out exactly. Yeah. So like for those
30:33
Speaker 2: of you who maybe missed that on a previous podcast episode,
30:37
Speaker 2: I said that the way I see gross and net
30:39
Speaker 2: when we talk about it is gross amount of money
30:42
Speaker 2: is really disgusting and gross because that's how much money
30:46
Speaker 2: we're not going to end up within our bank account,
30:48
Speaker 2: and the net is like kind of what we scooped
30:51
Speaker 2: and got to keep in our bank account.
30:52
Speaker 1: Great call, great call.
30:54
Speaker 2: Right, So your salary sacrifice is five percent of your
30:58
Speaker 2: gross income. Okay, makes sense. So that's three thousand, two
31:02
Speaker 2: hundred dollars a year into your superannuation. All up on
31:07
Speaker 2: an annual basis, you're contributing ten thousand, eight hundred and
31:09
Speaker 2: eighty dollars. We then apply our fifteen percent tax on
31:13
Speaker 2: concessional contributions. That's one thousand, six hundred and thirty two dollars.
31:18
Speaker 2: Your net contributions for the year then become nine thousand,
31:22
Speaker 2: two hundred and forty eight dollars.
31:25
Speaker 1: Yeah, got you and all.
31:26
Speaker 2: So we're doing the maths. Yeah, just a really.
31:28
Speaker 1: Quickly recap Concessional means not compulsory, like you don't.
31:32
Speaker 2: Like you don't have to, yeah, which is why it's
31:34
Speaker 2: only like sixteen hundred and thirty two dollars because it's
31:36
Speaker 2: on the amount that you didn't have to contribute, but
31:39
Speaker 2: you've chosen to gorgeous, gorge gorgeous, gorgeous. So now we're
31:43
Speaker 2: at the net contributions because we've taken out our tax.
31:46
Speaker 2: So you're adding nine thousand, two hundred and forty eight
31:49
Speaker 2: dollars into your super every year instead of the initial
31:53
Speaker 2: amount that I quoted, which was seven thousand, six hundred
31:56
Speaker 2: and eighty dollars. Got you, okay, thishavior is going to
32:01
Speaker 2: grow your contributions from ninety two thousand, four hundred and
32:07
Speaker 2: eighty dollars in ten years to three hundred and sixty nine,
32:11
Speaker 2: nine hundred and twenty dollars over forty years. Oh my goodness.
32:15
Speaker 1: That's that.
32:16
Speaker 2: Because the average long term growth rate for standard super
32:19
Speaker 2: funds is typically between seven and nine percent every single year,
32:24
Speaker 2: this figure not only grows by let's say seven percent yearly,
32:28
Speaker 2: that growth is compounded. So the money that your money
32:31
Speaker 2: made then makes money, and that's what compounding is. So
32:35
Speaker 2: every dollar that you earn then earns you more money.
32:39
Speaker 2: So remember you had seven grand in your super before
32:42
Speaker 2: doing any salary sacrificing. So your new total, including your
32:47
Speaker 2: contributions is sixteen thousand, two hundred and forty eight dollars. Yes, okay,
32:52
Speaker 2: So that's that initial seven grand that you had plus
32:54
Speaker 2: the nine thousand, two hundred and forty eight dollars that
32:56
Speaker 2: you've added in this financial year. Apply that by the
33:00
Speaker 2: seven percent annual growth, and we always go with like
33:04
Speaker 2: the lower number. I want to say this is for
33:06
Speaker 2: illustrative purposes only, just as an example. I'm just doing
33:09
Speaker 2: some maths. This is not a specific super fund. This
33:12
Speaker 2: is not a recommendation. This is just me doing some maths.
33:18
Speaker 2: Multiplied by that seven percent annual growth, that's one thousand,
33:22
Speaker 2: one hundred and thirty seven dollars. First year, you're going
33:26
Speaker 2: to have seventeen thousand, three hundred and eighty five dollars,
33:30
Speaker 2: Year two twenty eight thousand, four hundred and ninety seven dollars,
33:33
Speaker 2: and year three forty thousand, three hundred and eighty six dollars. WHOA,
33:37
Speaker 2: So you go, oh, forty grand after three years. I've
33:42
Speaker 2: been contributing so much. That's so disappointing. It's not like
33:46
Speaker 2: forty thousand dollars is a lot of money. But over
33:49
Speaker 2: the long term, this adds up, beck Like, and when
33:51
Speaker 2: I say this adds up, I mean doing the maths.
33:55
Speaker 2: On the day you retire at sixty five, which is
33:59
Speaker 2: the common retirement age. It's also the age that you
34:01
Speaker 2: can access stuff. You're on track to having one point
34:04
Speaker 2: two million dollars in your super.
34:06
Speaker 1: That's crazy. That's crazy.
34:08
Speaker 2: Just by adding five percent, that's so wild, okay, right,
34:12
Speaker 2: And as I said before, for some people, adding five
34:16
Speaker 2: percent is not going to change their lifestyle at all.
34:18
Speaker 2: We're just going to pretend we never had that cash.
34:20
Speaker 1: Oh my god, that's a wild okay. So I guess
34:22
Speaker 1: like in the grand scheme of things, you're only sacrificing
34:25
Speaker 1: around three thousand a year before tax.
34:28
Speaker 2: Before tax, and you get a little tax deduction at
34:31
Speaker 2: tax time, and so if I say, oh, Beck, do this,
34:34
Speaker 2: you're probably not going to notice it. And then at
34:36
Speaker 2: tax time you get some casholder in your account. Deal.
34:40
Speaker 1: It seems like maybe you wouldn't be that much worse
34:43
Speaker 1: off with your take home earnings, but it seems to
34:46
Speaker 1: all add up in your super. And yes, it doesn't
34:49
Speaker 1: take things like pay rises into consideration. Exactly, you stayed
34:53
Speaker 1: on this forever.
34:54
Speaker 2: Yeah, exactly. I'm just assuming that you never change your income,
34:58
Speaker 2: which is what I would want to do because in
35:01
Speaker 2: my ex financial advice life, I would always want to
35:06
Speaker 2: underpromise over deliver, Like I'd always want to make sure
35:09
Speaker 2: that I was kind of like promising you the bare minimum,
35:13
Speaker 2: and then if you exceeded it, I'd be like, I
35:15
Speaker 2: knew it, but I also just didn't want to bank
35:18
Speaker 2: on it, because like, we never bank on stuff like
35:20
Speaker 2: that because I can't promise it for sure, right, Like
35:23
Speaker 2: I don't know if your job is going to go,
35:24
Speaker 2: oh no, no pay rises this year, And what if
35:26
Speaker 2: I was banking on your finances changing next year to
35:29
Speaker 2: put you in a better situation. It's terrible. Like that
35:33
Speaker 2: puts you in such a significantly better financial position, and
35:37
Speaker 2: I just I'm so excited about it. Yeah, do you
35:40
Speaker 2: want another example? Sure, Like, do some more maths? Sure,
35:43
Speaker 2: because not everyone in our community is twenty four pack,
35:45
Speaker 2: that's true, and they will all be like, but I
35:47
Speaker 2: didn't start then, and that is cool. So let's say
35:50
Speaker 2: you're my age, we're aging millennials, we are thirty five
35:54
Speaker 2: years old, and let's say you have a suberannuation balance
35:58
Speaker 2: of thirty three thousand dollars. Yes, and then you've got
36:01
Speaker 2: an income of eighty five grand year, which seems to
36:03
Speaker 2: be pretty standard for people who are in that thirty
36:06
Speaker 2: five year age bracket. Right, and this is where we're
36:09
Speaker 2: doing the maths. Your employer is going to make the
36:11
Speaker 2: compulsory contributions of twelve percent to your super, so every
36:16
Speaker 2: year they are contributing ten thousand, two hundred dollars on
36:19
Speaker 2: your behalf gorgeous minimum. Then let's say you change your
36:22
Speaker 2: budget and you've told your employer, I really want to
36:25
Speaker 2: contribute five percent of my gross annual income, so my
36:29
Speaker 2: total annual income, So that's four thousand, two hundred and
36:33
Speaker 2: fifty bucks a year that you're going to contribute into
36:36
Speaker 2: your super. All up, that is fourteen thousand, four hundred
36:40
Speaker 2: and fifty dollars.
36:41
Speaker 1: OK.
36:41
Speaker 2: Right, then we do our tax, so that's fifteen percent
36:45
Speaker 2: on your concessional contributions, which is approximately twenty one hundred
36:49
Speaker 2: and sixty eight dollars. So then the net amount or
36:54
Speaker 2: the total amount you end up contributing to your superannuation
36:57
Speaker 2: that year would become twelve thousand, two hundred and eighty
37:01
Speaker 2: three dollars. So that's what we're working with.
37:04
Speaker 1: Now.
37:05
Speaker 2: This behavior beck grows your balance from one hundred and
37:10
Speaker 2: twenty two thousand, eight hundred and twenty five dollars in
37:13
Speaker 2: ten years to three hundred and sixty eight, four hundred
37:17
Speaker 2: and seventy five dollars in thirty years.
37:19
Speaker 1: Amazing.
37:20
Speaker 2: And that's not even taking into account any kind of
37:23
Speaker 2: like performance of your superfund. Like that's again just the
37:27
Speaker 2: bare minimum basics, like the bare minimum mats.
37:30
Speaker 1: Right, yes, okay, but we.
37:33
Speaker 2: Want to remember that you had thirty three thousand dollars
37:36
Speaker 2: in your subranuation when you began, before you started salary sacrificing.
37:41
Speaker 2: And I picked that amount because that is what a
37:44
Speaker 2: lot of people are like V I only have you know,
37:46
Speaker 2: thirty grand, or I only have forty grand in super
37:49
Speaker 2: There are some people in our community who are running
37:51
Speaker 2: rings around that, as they should, icons but imagine the
37:55
Speaker 2: power if they added more to what they're already doing.
37:58
Speaker 1: For sure, Rich reach rich, Richard Rich.
38:01
Speaker 2: But your new total, because you had that thirty three
38:04
Speaker 2: thousand dollars in your super fund to begin with, so
38:07
Speaker 2: your new total, including your additional contributions that you're now making,
38:11
Speaker 2: is forty five thousand, two hundred and eighty three dollars.
38:15
Speaker 1: Yes, okay.
38:16
Speaker 2: Then we look at that seven percent rate of return
38:19
Speaker 2: that I really like working with. That's about three thousand,
38:22
Speaker 2: one hundred and seventy dollars. First year, you will have
38:26
Speaker 2: forty eight thousand, four hundred and fifty three dollars. Then
38:29
Speaker 2: the year after that you'll have sixty four thousand, nine
38:31
Speaker 2: hundred and eighty seven dollars. Then the year after that
38:35
Speaker 2: you'll have eighty two thousand, six hundred and seventy nine
38:39
Speaker 2: thousand dollars. And you're going, oh, v like, is that enough? Well, yes,
38:44
Speaker 2: it is, my friend, because if your super fund performs
38:48
Speaker 2: better than seven percent, you'll end up with more money
38:50
Speaker 2: money win. But if it doesn't, that's okay, because you
38:54
Speaker 2: are actually on track to hit a million dollars by
38:56
Speaker 2: the time you reach the age of sixty seven.
38:58
Speaker 1: Wow, that's right.
39:00
Speaker 2: While so you'll still hit a million dollars, oh my god, like,
39:04
Speaker 2: but it's just over the long term. We need to
39:07
Speaker 2: commit to this. Yeah, And that doesn't take into consideration
39:10
Speaker 2: any like pay rises, or like any additional contributions, like
39:14
Speaker 2: if one year your super fund performs by eight percent
39:17
Speaker 2: instead of seven yeah, or like my superfund which a
39:20
Speaker 2: few years ago was doing last fourteen percent.
39:22
Speaker 1: Yeah, thank you.
39:23
Speaker 2: And I mean that doesn't take into consideration as well
39:26
Speaker 2: the fact that some years your superfund is going to underperform. Sure,
39:29
Speaker 2: but that's okay because over time it all balances out.
39:32
Speaker 2: We're not worried about that, not worried about that. We're
39:34
Speaker 2: not worried.
39:35
Speaker 1: Oh my god, that's incredible. It really snowballs.
39:37
Speaker 2: It does snowball like, it just picks up and picks
39:39
Speaker 2: up and picks up, and then all of a sudden,
39:41
Speaker 2: that's going really fast and crazy. What they say in
39:45
Speaker 2: subernuation and this is called the rule of seventy two.
39:47
Speaker 2: And maybe I'll do a whole podcast episode on this
39:49
Speaker 2: because there's like a really cool, like mathematical concept. I
39:53
Speaker 2: just said that aloud, and I was like, no one's
39:54
Speaker 2: going to care Victoria anyway. Essentially, because of the rule
39:58
Speaker 2: of seventy two, your money will double every ten years. Yes,
40:02
Speaker 2: so like if you can get to a million dollars
40:06
Speaker 2: by the time or a million dollars in your investments
40:09
Speaker 2: by the time you're sixty, and you're like, well, v
40:11
Speaker 2: I'm sixty, and like seventy is the new sixty, and
40:15
Speaker 2: like eighty is the new seventy. Yeah, I actually want
40:17
Speaker 2: to work until I'm seventy. Well, by the time you
40:19
Speaker 2: hit seventy, you have two million dollars that's insane.
40:22
Speaker 1: I can't even just feeling magical, like doesn't feel real, okay, but.
40:25
Speaker 2: Like that's why. But that's why compound interest is so
40:29
Speaker 2: hard for humans to wrap their heads around because it
40:32
Speaker 2: just genuinely feels fake. So you go compound interest. And also,
40:37
Speaker 2: if you put your money in today, you're not going
40:38
Speaker 2: to see the returns tomorrow, Like it'll just be like
40:41
Speaker 2: sense and you'll be like, what's the point. But you've
40:44
Speaker 2: got to trust the process. Process, Trust the process, Trust me,
40:48
Speaker 2: I promise.
40:49
Speaker 1: Does every employer do salary sacrificing or is it like
40:52
Speaker 1: something you just request? It's just something you can request, Okay, amazing,
40:55
Speaker 1: you can just do it.
40:56
Speaker 2: And also if you're like V, I don't know if
40:58
Speaker 2: in my budget I can afford to do this like
41:01
Speaker 2: salary sacrificing through my employer, because like you know, they'll
41:04
Speaker 2: take it out of my pay and like some months
41:06
Speaker 2: I need it, you can always just literally be pay
41:09
Speaker 2: money to your super on a monthly basis true, and
41:11
Speaker 2: then at tax time claim it back. Hell yeah, So,
41:15
Speaker 2: like it can be really easy. And I think a
41:16
Speaker 2: lot of people think the second it becomes super it
41:19
Speaker 2: becomes really complex. But it's not, I promise. So, like,
41:22
Speaker 2: the longer you do it, the more time it has
41:23
Speaker 2: to grow back.
41:24
Speaker 1: That's so cool.
41:26
Speaker 2: So beck, summary, what have we collectively learnt today?
41:30
Speaker 1: Okay, so that contributions before tax can not only lower
41:35
Speaker 1: your tax income, but they can create compounding wealth in
41:38
Speaker 1: your super.
41:39
Speaker 2: So we're going to get rich.
41:41
Speaker 1: We're going to get rich, and they're retiring with a
41:43
Speaker 1: comfortable amount in your super as a personal thing. And
41:45
Speaker 1: it depends on what you want your retirement to look
41:48
Speaker 1: like exactly.
41:49
Speaker 2: I don't know about you. What does my retirement look like?
41:52
Speaker 2: It's looking bright, hot, smart, rich? Yeah, girl, exactly. And
41:58
Speaker 2: maybe your super is actually the key to unlocking that
42:01
Speaker 2: like really intimidating million dollar figure that we are not,
42:06
Speaker 2: you know, really feeling comfortable with still, but like salary
42:09
Speaker 2: sacrificing could help you get there. All right, I feel
42:14
Speaker 2: like I've used terms like through renuation and earlier mathematical
42:18
Speaker 2: concept and called it really cool. So I'm calling it time.
42:22
Speaker 2: I think that that is all we have time for
42:24
Speaker 2: today in time out. Yeah yeah, yeah, I'm putting myself
42:27
Speaker 2: in time out. I also really want to do some
42:28
Speaker 2: maths on the rule of seventy two because I'm wondering
42:30
Speaker 2: if that could actually be a whole podcast episode, because
42:33
Speaker 2: through my head it's still cool.
42:34
Speaker 1: A couple of your cylinder maths after this.
42:36
Speaker 2: I yeah, I'm the daughter of an accountant. Guys, if
42:41
Speaker 2: you found this episode really helpful or maybe you learnt
42:44
Speaker 2: something new, please let us know by leaving us a
42:47
Speaker 2: cute little review. Maybe tell us what you're like in
42:50
Speaker 2: the Spotify comments, what your five percent contribution could look like.
42:54
Speaker 2: I would love to see it, and thanks as always
42:56
Speaker 2: for being part of our gorgeous community. Guys, make sure
42:59
Speaker 2: that subscribed so that you never miss a deep dive episode.
43:02
Speaker 2: We will catch you on Friday for another edition of
43:05
Speaker 2: Friday Drinks. Till then, take care of yourselves and of
43:07
Speaker 2: each other.
43:08
Speaker 1: Bye, guys.
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