Part-time work can boost nest-egg
THE recent falls in share markets have highlighted the importance of saving for retirement.
One option is to stay at work longer but the greatest resource of all is a partner who is prepared to return to the workforce.
Here is a common scenario. The house is almost paid off, the kids have left school and the hitherto stay at home mum has the opportunity to take a part-time job. Let's assume she is 44 and finds a job paying $29,000 a year. If her wages increase by four percent per annum, and compulsory employer superannuation remains unchanged, she would have $178,000 in super at age 65 from the employer superannuation alone if her fund averages nine percent per annum. That's not to be sneezed at, but if she salary sacrificed an extra $8000 a year, she would have an additional $421,000 in super - a total of $599,000.
Take it a step further. Suppose she makes an additional after tax contribution of $1,000 a year and receives the government co contribution of $1000 a year. That will increase her superannuation by a further $123,000 to give her total super of $722,000 at age 65.
The simple act of going back to work in a relatively low paid job has enabled the family to boost their retirement assets by close to three quarters of a million dollars. It has also produced after tax income of $17,750 a year to help with ongoing expenses, or even a great holiday, whilst she is working.
Noel Whittaker is a director of Whittaker Macnaught Pty Ltd. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. His email is email@example.com.