Tax with Max: Weighing up salary sacrifice

Making sacrifices early, going back to work after retirement and passing Centrelink’s assets test.

Summary: A salary sacrifice strategy has the greatest overall benefit for those on the highest marginal tax rate, but even someone on the lowest tax rate benefits from doing this. Although savers have to wait until retirement to benefit, the strategy is flexible and can be stopped in cases of financial hardship.

Key take-out: Over a period of 40 years, the pain of foregoing about three big Mac meals a week allows a saver to earn about an extra $156 a week in retirement.

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