Trish has been at home looking after our 3 kids for the last 17 years (done an amazing job) but also has run a small at-home business. Many of the early years her income was well below $18k so we didn’t see the value putting in superannuation concessional contributions (no tax savings).
However we always took advantage of the super co-contribution scheme
where the Government give you an additional 50% of what you put in. How could we resist making 50% return in one year!
Our FIRE strategy has given us the problem of a growing dividend stream
! We now have the opportunity to put the full concessional contribution
of $27.5k into her super each year and we have also used the super carry forward scheme
(using unused concessional caps).
We have always had a low cost, high performing industry fund in High Growth (shares).
The recent ABC article on average super balances got me thinking. Trish is punching well above her weight level!
Her balance is amazing compared to the table within the article, with seemingly minimal sacrifice along the way and it’s all been done with a below average wage.
Why is this important to balance out super in couples? Many mother’s literally give their whole life to look after the family and there is still a big gender wage gap. Women are the more likely to become homeless
than men in later life. The chilling statistics can be seen here
. In domestic violence situations it accounts for 77% of females being homeless. We plan to be together forever, but it’s good to know Trish has a great super balance and I have insurance in my super to provide well in case I’m not here.
Although it is currently the best vehicle I also consider future governments changing the rules! For example in Australia there is an 18 month wait for caravans (compounded by COVID, but the industry has gone nuts with all the boomers before COVID)! Once you hit preservation age, some people buy their dream by pulling it out of their super. We know a few people who have done exactly that and they get more pension now too (good for them as it’s their money). Will government allow this forever? This is why we live by the 1/3 rule!
Super only forms part of our FIRE plan (we want to RE) but currently it is the most tax effective vehicle in the strategy and well worth the one or two hours per year to maximise it’s performance.
Do you have a specific superannuation strategy? We LOVE to learn from others, so please share it with us in the comments!