Ask an Adviser - mortgage or super?

I'm not sure if I should put more money into my super or onto my mortgage - which is better?

With the housing market hitting all-time highs in many suburbs around Australia, more and more people are supporting larger mortgages.  This often comes at the cost of growing savings in other areas such as superannuation.  Super and the family home are often the two most significant assets people have when they retire but people often neglect their super during their mortgage paying years.  

Super is important because even when you retire, it can keep working for you and provide you with a regular income. It is also a tax-effective way of saving which means your money may work harder for you if it’s in the super environment.  But having a paid off house when you finish working will also play an important role in your comfort in retirement. This can present a savings dilemma – pay more onto the mortgage or boost your super?   

When deciding which option is best for you, you should consider things like:

  • Your current salary and how tax effective making contributions may be for you. Salary sacrifice contributions can help you save on tax and boost your super – whereas money you put into your mortgage is taxed at your personal marginal tax rate. 
  • When you plan on retiring and if you need access to the money before then? Money in super is generally locked away until you reach your preservation age - the closer you are to retirement the less of an issue this is likely to be. 
  • Will your mortgage be paid off by retirement if you don’t put any extra onto it? If so it may be a good idea to boost your super instead and benefit from any tax advantages this may give you.   
  • How much other debt do you have? Credit card and personal loans can have high interest rates and it may be more beneficial to reduce that debt first. 

What is best for you is a personal decision and you should consider obtaining advice before making any changes.  TelstraSuper Financial Planning can work through your options with you.  To book in to see an Adviser call 1300 033 166 or request a call.