Luke is 33 years old and currently has his super in a retail fund. He earns $90,000 a year and only makes his standard Superannuation Guarantee contributions from his employer. His current balance is $45,000 invested in a balanced portfolio.

If Luke wishes to retire when he turns 65 he would retire with approximately $366,000 by using the ASIC Superannuation Calculator. This would only give him a retirement income of $21,500 per year based on his life expectancy.

If Luke started salary sacrificing $5,000 a year now from his employer and can contribute an additional $1,000 a year from his after tax money Luke could retire with $554,000. This is a substantial increase from just putting a little extra away a year. In addition to this, by salary sacrificing Luke will save $2,175 in tax per year based on the current tax rates.

When Luke’s mother passes away she leaves him an inheritance of $180,000. Luke decides to put this into super as a non-concessional contribution . Luke has triggered the bring forward rule as he has exceeded his cap of $100,000. For the following two years Luke can only contribute a combined total of $120,000 in non-concessional contributions.

By doing all of the above Luke will now have an estimated super balance when he turns 65 of over $780,000. This gives Luke a retirement income of $46,000 a year. A much healthier retirement than if Luke made no additional contributions to super.

This is general illustration only, and the results will differ depending on the investment returns achieved which cannot be guaranteed.

This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.