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Families and Super

Yawning baby

If you have already started a family or are planning to go there, you already understand the costs associated with kids, particularly solving the dilemma of going back to work or staying at home. Driven mainly by concerns over the household budget, parents doing their sums are weighing the rising costs of childcare against government benefits and tax concessions.

Should one of you stay home? Should you both work?

Childcare services cost, on average, $105 a day, while a nanny can charge up to $35 an hour.

Unfortunately, it’s going to cost you no matter which way you go, but while most people are thinking about their finances here and now, they’re not considering the long term impact on retirement savings.

As the costs of childcare increase, one parent staying home while the main income earner goes to work might see them better off in the short term, but what does that do to the stay-at-home parent’s super?

According to research undertaken by Canstar, an individual earning an average of $50,000 per annum could expect to lose up to $34,000 in the first year. This figure increases to as much as $95,000 in three years when factoring in inflation, tax and lost investment earnings. Extrapolate that out to ten years and ... well, you get the picture.

Considering our aging population, increased pressure on governments to provide infrastructure and better services for the elderly; there will be a much greater expectation that we’ll be funding our own retirements.

So what can you do? Is it possible to raise children and retire in style?

There is an excellent calculator on ASIC’s MoneySmart website to assist you in determining how a career break will affect your super at retirement. Go to and search for “career break super calculator.”

Before you race off to your nearest animal shelter and adopt a “furry-kid” instead of having the human version, there are options.

Parents opting for the one-stays-at-home approach might consider spouse contributions. Under this scheme, the working spouse contributes to the low- or non-income earning spouse’s complying super fund. Tax concessions may apply.

Before starting a family, consider boosting your super with voluntary after-tax contributions – staying within the limits of course. While at this stage it’s also a good idea to ask us about alternatives that suit your current needs and future dreams.

Sources: Career break super calculator


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