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The super split you need to consider

The super split you need to consider

One of the big reason women don’t have enough super in retirement is that they pause contributions when they’re not earning because they’re at home with the kids.

For many of us it’s the first time we allow the idea that we’ll rely on our partner’s super when we’re older to creep into our minds. There are a few reasons to outright reject that idea, one of them is that one in three marriages end in divorce. When it comes to super, a partner isn’t a plan.

If you’ve decided to go down to one income, or maybe one and a half, so one of you can be at home, you’re already sharing the consequences of that in your daily financial choices like opting for no-name brands and cutting out treats from your shopping list; but how many of us think through whether we’re also sharing the longer term financial implications of that?

Staying at home means you’re almost certainly there for their first smile, their first words, and their first wobbly steps. And it means you’re there for a million exploding nappies, apparently unending tantrums, and lots of unidentifiable food smears on the walls.

Not only is it relentless and unpaid, it also means pausing our careers and any advancement at work that might have otherwise happened during the time we stay at home. In case that doesn’t already feel pretty unfair, while we’re trying to remove the avocado our beautiful little person has painted into the fur of the (very patient) dog, our partner’s super is continuing to grow and we short change our retirement.

So how do spousal contributions work?

From 1 July 2017, if you’re earning less than $37,000 p.a., your spouse can contribute to your super and get a tax rebate of up to $540 for the first $3,000 they contribute. The rebate will decrease for incomes above $37k p.a., and will completely phase out if your income is $40k+ p.a.

Another option is to apply to have super contributions split between you and your partner so some super is paid directly into your super account by their employer. Up to 85% of your partner’s super in any financial year can be paid into your account instead.

Whether you’re at home for a few weeks, months, or years, and whether you and your partner take turns as primary care giver at different times, super splitting can be a way of making sure your short term decisions don’t leave you penalised in the years to come, and that’s something worth thinking about as you abandon reading this article because your beautiful bundle of joy is crying to be fed.