This conversation started over on anatidaev's journal:
http://forum.mrmoneymustache.com/journals/growing-a-moustache-in-booming-perth/300/ and as you can see, I was pretty firmly against salary sacrificing into my super in that debate.
However, I've now had time to think about it and would like opinions/feedback on my maths and my concerns.
The facts:I am 26 years old, female.
My salary is $107,200 before tax. In the very near future it will rise to $110,148.
My employer makes the compulsory 9.5% contributions: so when I get my imminent pay rise, $10,464 (not included in my salary above).
I currently have a super balance of $39,324.
I am very likely to become a SAHP at about the age of 30, so in a bit over 3 years.
My maths:The cap on concessional contributions is now $30,000 per annum.
So to meet the cap I would be contributing $19,536 (this amount would lower each year as the terms of my employment mean I will get 6 or 7% raises each year for the next three years, so my employer's contributions would rise in line with that).
Every dollar I earn above $80,000 is effectively taxed at 39% (37c in the dollar plus 2% medicare levy), so if I was salary sacrificing the $19,536, I think it would mean I would have $11,916 less in my take home pay each year.
Assuming that I salary-sacrificed up to the $30,000 cap, I would have roughly $130,000 in super at the time I started popping out babies (~$40k now + (3 years x $30k)). This is ignoring growth in the next three years, but I was too lazy to do that bit of the maths.
Let's assume that I never add another dollar in contributions after I turn 30.
My super fund allocation is meant to grow at a rate of CPI+3.5%, so I'll say 6.5%.
Does this mean that my $130,000 in 2017 would be worth $859,867 in 2047 when I turn 60?? i.e. a SWR of $34,394??
My emotional response:I am having what I know to be a typical 'poor person' response to this: part of me believes that if I don't have money right where I can get at it NOW if I need to, it will somehow cease to exist before the point at which I need or want it. I'm afraid that the super rules will change and I'll miss out somehow.
I'm scared that if I put my money into super, it'll delay my FI date.
On the other hand, I know that one of the issues we face in Australia is that women (especially mothers) end up with far too little super to be able to live on. This seems like an option that would more or less guarantee that I would have enough super when I get to retirement age, so even if the shit hit the fan and I had to struggle financially, I would know that I had security at traditional retirement age.
(Yes, I'm very afraid of ending up poor, which seems irrational given my income and savings rate, but I grew up dirt poor and haven't managed to leave that fear behind entirely yet).
So: should I do it? Should I prioritise post-tax investment instead? Thoughts? Opinions? Flaws in my maths or logic?