Super, mortgage or cash: how to think about it
When you have spare capacity in your budget, three doors open: send it to super before tax, throw it at the mortgage, or keep it as take-home. There's no single right answer — it depends on your tax rate, your mortgage rate, your timeframe, and how much you value being able to touch the money. Here's the logic the calculator runs.
Why salary sacrifice is tax-efficient
Money you salary sacrifice into super is taxed at a flat 15% on the way in, instead of your marginal rate — which for many earners is 30% or more once you include the Medicare levy. That gap is an immediate, guaranteed saving. The catch is that the money is preserved: you generally can't touch it until you reach your preservation age (60) and retire. So super tends to win on the numbers but loses on flexibility.
Why paying the mortgage is quietly powerful
Every dollar off your mortgage saves you the loan's interest rate, and that saving is effectively tax-free and guaranteed. With rates where they are, that can be a higher certain return than a risky investment — and if the money sits in an offset account, you keep access to it. For many households, the mortgage is the calm, sensible middle path.
Why you might just keep the cash
Take-home is taxed at your marginal rate, and if you invest it outside super the earnings are taxed too — so it's the least tax-efficient on paper. But it's completely liquid. If you might need the money for a house deposit, a career break, or simply peace of mind, that flexibility can be worth more than a few percentage points.
How we calculate this
- Tax saved now compares your take-home with and without the sacrifice, using the resident brackets, Medicare and (if ticked) HELP/HECS — so it captures the full benefit.
- Super projection grows your after-contributions-tax amount each year at your return, less super earnings tax.
- Mortgage projection grows your after-tax cash at the loan rate, tax-free.
- Invested projection grows your after-tax cash at your return, less tax on earnings at your marginal rate.