Balancing super contributions and early retirement goals

Question

Hi there, here is something I've been struggling with for a few weeks.

Background:
* I'm looking to retire in 10-15 years (depending on market, salary growth, life events etc...)
* Looking to minimise tax through salary sacrificing super (can add 10-14k per year depending on bonuses under the concession threshold)
* Don't want to sacrifice time to retirement by putting too much into super and not having enough to live for potentially 15 years before I can access super.

Keen to hear how other people in similar circumstances manage this when the investment timeline is 10+ years.

Answer

Navigating the balance between contributing to superannuation for tax benefits and ensuring sufficient liquidity for early retirement is a common challenge for many Australians. Here are a few strategies that others in similar circumstances have found useful:

Diversified Investment Portfolio: Instead of putting all additional savings into super, you might consider diversifying your investments. This could include a mix of shares, bonds, real estate, or other investment vehicles outside of super. This strategy can provide you with more accessible funds before reaching the superannuation preservation age.

Superannuation Splitting: If you have a partner, you might consider super splitting, where you contribute to your partner’s superannuation. This can be particularly useful if one partner plans to retire earlier than the other, or if one is significantly younger, potentially providing earlier access to at least part of the family’s superannuation savings.

Transition to Retirement (TTR) Strategy: Although primarily used by those who have reached preservation age but are still working, a TTR strategy allows you to start drawing a pension from your super while continuing to work. This can help manage tax while accessing some of your super benefits.

Non-Concessional Contributions: You might also consider making non-concessional contributions to your super. These contributions are made from after-tax income and are not subject to the contributions tax within the super fund. This could be a way to increase your super balance without affecting your concessional contributions cap.

Investment in Tax-Efficient Vehicles Outside of Super: Look into other tax-efficient investment options such as insurance bonds or certain types of managed funds that offer tax advantages. These can provide growth opportunities without the restrictions associated with superannuation.

Regular Review and Adjustment: Regularly review your investment strategy to ensure it aligns with your changing financial goals and circumstances. This might mean adjusting how much you contribute to super versus other investments as you get closer to retirement.

Pearler can be a valuable tool in managing your investment strategy, particularly with its focus on long-term, goal-oriented investing. Pearler’s platform allows you to set and track your financial goals, which can be incredibly useful when you are balancing contributions to superannuation with other investment needs. The platform’s ability to facilitate investments in a wide range of assets can help you diversify your portfolio effectively, aligning with your retirement planning and tax minimization strategies.

You can find out more about this topic here: Superannuation And Fire

Disclaimer

I am an AI-powered chatbot and not a financial advisor. The information provided is for educational and informational purposes only and should not be considered as financial advice. Investing involves risks, and past performance is not indicative of future results. It is important to conduct thorough research and consider your own financial situation and risk tolerance before making any investment decisions. It is always recommended to consult with a qualified financial advisor or professional before making any investment decisions.

Answer

Hi Amir.

As you can see this it a bit of a push/pull conundrum with tradeoffs on both sides.

It depends on how old you are and how close you are to the super access age, either now and when you expect to retire.

You’ll have to figure out exactly how much you’ll need for that 15 year period, and then be mindful of the risk of market drawdowns during that period where you’re living off the portfolio until you can reach super access.

If you are able and willing to do some part time work during that time, it will help enormously in the success of your early retirement and seeing yourself through to 60+, so I’d strongly consider how you can build that optionality into your situation.

All the best.

Home

Products

Learn

About

Pricing

Log In

Sign up for free

Sign up for freeSign up

Home

Products

Learn

About

Pricing

Log in to Pearler

Back

Amir Ibrahim

Follow

ASX ETFS & Shares

US Shares

Micro

Kids

Super

HomeSoon

Read

Listen

Community

Refer a friend

Rewards

Prizes

Home

About

Pricing

Help Center

Contact Us

Feature Requests