Hey there.
I've only recently started thinking about super co-contributions. I currently don't make any additional contributions. But I've recently been thinking about the discount for co-contributions as they are paid out of pre-tax dollars.
I've also never been able to look away from a discount. Am I stupid for turning this one down? Particularly if I'm going to stick my funds in an index anyway? May as well stick them in with pre-tax dollars into an index hidden away in my super?
Just wondering if anyone else does the same? And what their reasons are?
For context, I have the following reasons for not doing this. Some are stupid, some I think are sensible:
Stupid- I used to think Super was a con - a vehicle to allow lazy fund managers to skim fees off the 9.5% that employers have to pay into employees super account. This was partly because my first employer had MLC as a default manager, probably due to the kickbacks they received, and the Golden Egg used to charge ginormous annual fees.
- I've never had a problem saving. A mandatory 9.5%, or around 8% when I started working, seems ridiculous. If they want to make it mandatory, make it at least 35%! So the idea of forced saving seemed silly.
- The main reason tho was that you can't access it til your 55,60 - or some far off age. My reasoning is that you can control many things in your life but one of the things you have little control over is when you might die. And you may well die well before you're 55. So my view is that its better to have control of your assets and do with them what you will, while your fit and healthy. Investments, holidays etc.
Sensible, maybe- I've wanted to buy a house. Money in a PPR is pretty tax effective. Alas, changing life circumstances, the nonstop price growth of Australian property has meant that I haven't bought in (again). Renting seems to make sense on many levels, but the tax effectiveness of buying property to live in is hard to argue with, and something I've not benefited from. But additional money put into super would reduce equity in a house.
I appreciate its all relative to your circumstances. For context, I'm turning 40 this year, so the far off age is getting closer. Also, to my great and considerable surprise I've used the
http://mustachecalc.com/ to find out I may have actually reached Technical FI. I consider it a technicality, as I don't believe it, and the annual income I'd generate from my stash would provide for a very frugal life and I'm not sure I want to go down that path (i.e. 63% of expenses would go on rent), even tho I'm actually living it now. So while I wouldn't have to work ever again, i'd also not really be able to go to a restaurants with any regularlity (except to use the toilet). Maybe this isn't such a bad thing, but at the moment I don't think its particularly realistic for me. Then again, if someone told me I would never
have to work again....
Anyway, I guess its still relevant if I bowed out from full time work as I'd be earning super on any part time work I'd pick up.
Look forward to your insights, comments, jokes etc.