When you’re raising a family, things can get expensive. Putting money away for a distant retirement can be a low priority.

There are school fees, hobbies and sports to pay for, the mortgage to take care of, other investments to make and so much more to consume all your cash.

But even small changes now can make a big difference by the time you retire.

Let’s look at a case study:

Meet Millie and Andy. They’re both 45. Millie works 2 days a week for an electricity provider, earning $40,000. Andy works full-time at a mechanics on $75,000. They’ve got 3 kids living at home with them.

Millie’s current super balance is $90,000 and Andy’s is $120,000. If they continue as they are, their combined super balance at 65 will be $728,000. They would like to live on $67,000 a year in retirement. That is considered a ‘comfortable retirement’ and their super will let them do that, even if they take $200,000 out at retirement to pay off their outstanding mortgage and buy a new car for $50,000.

However, they will be partly reliant on the age pension from 67 and will use their super to top up their lifestyle until that runs out. Then they’re totally reliant on the age pension from their early 80s.

If Millie and Andy want to avoid relying solely on the age pension for as long as possible, they could think about retiring later or living on less in retirement. Or, they could look at putting money into their super now.

Co-contributions: even a small amount can make a difference

If Millie, a low-income earner, contributes to her super by after-tax contributions, the government will also contribute to her super. It’s called a “co-contribution”. It will be automatically paid into Millie’s super for her when she makes after-tax contributions because of her low income*.

If Millie contributes $1,000 a year (about $20 a week), the co-contribution will be a bonus $500 extra to her super a year – for free! The $20 a week Millie contributes becomes $38,000 by retirement at 65. Her initial $20,800 ($20 a week x 52 weeks x 20 years) has almost doubled!

This could allow Millie and Andy some extra freedom at retirement. They could do some home improvements, take a holiday, pay off other debt or simply enjoy longer in retirement without relying solely on the age pension.

Of course, Millie and Andy might choose to do a combination of retiring a little bit later, living on a bit less and putting extra into Millie’s super. Choosing to retire at 67, live on $63,000 a year and put an extra $20 a week into Millie’s super now means their super could potentially last until their early 90s.

If you want to make after-tax contributions to your ElectricSuper account, you can use the Vary Your Contribution form to have your electricity employer make contributions via your payroll.

family running on beach


*Other criteria are considered before a co-contribution is paid by the government, such as your current super balance, your age, your work status, and more. See the ATO website for more information.


Disclaimer and assumptions:

This story is provided as an example only. It uses rounded and approximate figures. We do not recommend you take action based on the information in this story without speaking to a financial planner first, as this story and its examples do not consider your circumstances, needs or objectives. See the ATO website for more information about co-contributions and putting money into super.

We recommend you speak to a financial planner before making changes to your super and other money.

This story was prepared in 2021. Factors such as minimum compulsory Superannuation Guarantee amounts and other things have changed since that time. You should not rely on this story when making decisions about your superannuation.

Assumptions used in this story: 7.8% average annual returns on their super while working. 6.8% average annual returns on their super money in retirement. 0.5% super administration fees while working. 0.4% fees in retirement. $1,200 annual insurance premiums paid between the couple. 2.1% CPI, 1.1% improvement in living standards.

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