Super deal of the century

If there's one thing I hate, it's people looking a gift horse in the mouth. And I reckon hundreds of thousands of Aussies are turning their back on a lot of free money from the federal government.

Do you want to help your kids?
To labour the point, it could be argued that a lot of parents are giving up a chance to help their working kids for life. And many youngsters are passing up a chance to turn some of their super into a million dollars or more upon retirement.

Why is super boring?
Looking for excuses, you can blame boredom for depriving some young people of possibly a million dollars - that goes with the superannuation patch. My favourite Larsen cartoon supports the argument that super is made out to be too boring. The cartoon shows a dinner party of canines all looking very bored. From memory, the caption read: "Everyone was having a great time until George brought up the subject of superannuation."
The sad reality is that superannuation is not boring, as it's the gateway to delightful restaurants and overseas holidays in retirement.

The government kicks in
And a government initiative really could helps lots of us have materially wonderful retirements. It's called the super co-contribution, which now is bigger and better.
In a nutshell, if you are on anything up to $28,000 and you put an additional $1000 into your super, the government will throw in an additional $1500.
After the $28,000 income level, the co-contribution reduces at 5 cents per dollar of income, but at $38,000 it is still $1000. And at $40,000 it is $800 a year from the very ‘generous' Treasurer Peter Costello.

Forget the paperwork
You don't have to fill out any additional forms or apply, but simply show it on your tax return. And provided you're eligible - and a lot of people are - the government kicks in.
To check the eligibility criteria go to www.ato.gov.au or call 13 10 20.

The ultimate gift
Sure, some people might say someone on $28,000 is already putting into compulsory super and would find it hard to put an extra $1000 a year into super. However, it is only $20 a week and one part-time job or a caring parent with some spare cash could make it happen.
When you think about it, this could be the ultimate gift from a parent to a tad irresponsible kid who you would love to have some 'insurance' for later life. It could also be a great gift to a great son or daughter.
So, how does this government present become a million dollars?

Doing the numbers
Assume a 22-year old puts in an extra $1000 into super and the government slams in $1500 and little else goes on until the youngster hits 30 years of age. That's nine years of $2500 - or $22,500.
And assuming a return of 9% for the fund, this amount alone, rolling over until the then-youngster retires at age 65, would become more than half a million dollars.
Then there is the compulsory super also rolling over to above half-a-million after 43 years of work after age 22. Hey presto, a million bucks courtesy of a good government idea or a caring parent or a smart kid and that very 'unboring' super.

One small catch
By the way, there is a small catch - the parent can't put the money in. According to the law, the extra super has to go to the kid, who then contributes it themself. That's a huge task to perform for someone who looks set to collect a million bucks or more on retirement.

Age catches us all
The biggest task all governments and parents have ahead is to explain to young people that ignoring the future now could really make for a very disappointing life down the track.
As houses become increasingly expensive, like many Europeans discovered decades ago, super needs to be seen as an alternative to home ownership or at least a fantastic 'add on' to an investment in bricks and mortar.

Click here to visit Peter Switzer's website