ellenandco-questions1Question
I am a 36 year-old married man with two kids under 8 and my wife works one day a week. I recently took a job that involves me living away from home although I am away for two weeks and then home for two. My income has increased by nearly 100 per cent but I am finding that a lot of the increase in income is taken in income tax.
I have had financial advice to salary sacrifice some of my income into super which would save on tax and build up our retirement nest egg. We were wondering if this was the best thing to do in our circumstances.
Regards,
James.
Answer
Dear James,
Whilst the advice you have been given is not bad advice, you should consider a couple of things. First of all, your job is relatively new and there will be a settling in period before you can really judge if it suits you and your family. So it might be wise not to make any commitments based on your increase in salary for around 12 months.
Secondly, superannuation is a great place to build up a retirement fund, but you will not be able to access those funds until you reach the legislated retirement age, and for you at 36 that’s still 24 years away!
Without knowing anything other than what you have written here it is not possible to give you concise financial advice, but you could give consideration to some form of negative gearing (outside of super) which would also reduce your tax. For example, if you were paying $10,000 per year interest on an investment loan, all of the interest you pay would be deducted from your income thereby reducing your tax. This would also give you an asset that was accessible well before you reach the age where your superannuation funds will become available to you – besides your financial plans will change as your family grows and you have to educate them etc.
We suggest for the time being, you pay the income tax and save whatever excess income you can between now and May next year in a bank account. When you have been in your new job for that length of time you will know if the job really suits you and your family, and if it does, and you find you are saving well – seek financial advice again then, and it will still not be too late to get back some of the income tax you have paid.
Regards,
Ellen, Julie and Grant
The advice may note be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.
Ellen Schafer & Assoc. Pty Ltd ABN 67 072 661 548 is an authorised representative of GWM Advisor Services Limited, ABN 96 002 071 749, an Australian Financial Services Licensee with it’s Registered Office at 105-153 Miller Street, North Sydney
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