The $50 Salary sacrifice challenge is based off the idea that consistently saving for a very long period of time will make a substantial difference in the end.

I have heard of a lot of different savings plans starting from back in the day; piggy banks or coins in a jar and with today’s technology, applications that will take your change after purchasing an item and invest it for you. One issue with a lot of ‘savings ideas’ is that they designed for you to save money up to a certain point to then consume it.

One thing I love about clients investing in super is that it is ‘forced savings’. You can’t just take it out and spend it when you feel like it. This helps to promote real wealth and also makes your money work for you over a long period of time.

Now, back the challenge. If you were to salary sacrifice $50/week into your super, this will result in a net contribution of $2,210/year after tax, going into savings. If you were to continue doing this for a period of 35 years, this would add a total of $77,350 extra contributions. In the big scheme of things, this doesn’t sound like a great deal of money however lets look at an example to see what difference this will make after 35 years.

Example Client:

Age                                                                  30

Income                                                             $60,000/year

Starting Balance                                                $50,000

Salary Sacrifice                                                 $2,210 (Net of tax)

Employer Contributions (9.5% income)                $4,845 (Net of tax)

Table 1 is a projection of just employer contributions over a 35 year timeframe where Table 2 adds in the extra ‘Salary sacrifice’ payments. As you can see in Table 1, you can see that with an expected annual return of 7.5% (Comparable to a balanced/growth fund) the extra contributions and interest lead to an extra $286,307 at age 65. This is a total return of 370% on contributions over this time.

Table 11017 $50 Table 1

Table 2

1017 $50 Table 2

An additional benefit of salary sacrifice is that it also reduces your taxable income. This reduction is dollar for dollar remembering that you will pay 15% tax on payments going into super. This is however taxed by your super fund and not included on your income tax return.

Relating this back to the $50/week challenge, if you were to salary sacrifice $50/week while earning $60,000, this would only reduce you take home pay by $32.75/week because you will pay less tax on your income.

Important points to consider before taking action:

  • Once money is contributed to super, it then has restricted access until retirement. This can be both a positive (forced savings), however it should be considered before depositing any savings.
  • Overall goals should be considered. For example, if your main goal is to pay down your mortgage ASAP, then extra contributions to super may be taking money away from achieving this goal. If however, your main goal is to ensure you have enough savings for an early retirement, than contributing extra money to super may help achieve this.
  • All strategy should be discussed with a relevant advisor first to ensure that whatever you choose is in line with your situation now and goals for the future.


Ryan O’Grady

Financial Planner

Authorised Representative, AMP Financial Planning

Navigate Financial Group Pty Ltd (ABN 128 056 002), is an authorised representative and credit representative of AMP Financial Planning Pty Limited, Australian Financial Services Licensee and Australian Credit Licence Number 232 706.

‘This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.

If you decide to purchase or vary a financial product, your financial adviser, AMP Financial Planning Pty Limited and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.’


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