If you’re in a couple with an age gap where one partner is retired and can access their super while the other is still working, this strategy hiding in the super rulebook could make a big difference to your household cash flow.
Pete’s 55 and working full-time on decent money. His wife Sandy just turned 60 and has decided to fully retire.
Here’s their problem: Pete’s salary sacrificing $30,000 into super for the tax breaks, but it’s all locked away until he hits 60.
Meanwhile, Sandy’s decision to pull up stumps from work has made household cash flow tight. And, most of their super wealth is sitting in Pete’s account – completely out of reach.
This is the exact situation I helped a couple work through recently, and the solution was sitting right there in the super rules.
How Super Splitting Actually Works
Here’s what we did for Pete and Sandy.
Pete keeps making those $30,000 salary sacrifice contributions and getting all the tax benefits. But here’s the clever bit – he can then split up to 85% of those contributions with Sandy.
In dollar terms, that means $25,500 can be shifted from Pete’s super account into Sandy’s account. And because Sandy’s 60 and fully retired, she can access her entire superannuation balance through a tax-free pension.
Pete gets his tax breaks. Sandy gets accessible cash. Household finances stay comfortable.
Best of both worlds.
The Real-World Impact
How this played out for Pete and Sandy.
Before super splitting:
- Pete: Contributing $30,000 to super but can’t touch it for 5 years
- Sandy: Fully retired, cash flow getting tight, super balance much smaller than Pete’s
- Household: Feeling the pinch without Sandy’s income
After super splitting:
- Pete: Still gets the full tax benefit from his $30,000 contribution
- Sandy: Receives $25,500 in accessible super money to supplement their household income
- Household: Cash flow stress eliminated, both partners benefiting from the strategy
The beauty is Sandy didn’t have to wait five years to access this money. She could start drawing on it immediately because she’d already hit the magic age of 60.
Who Can Use This Strategy?
Super splitting works best when you’ve got:
- An age gap between partners – ideally where one partner can access their super but the other can’t
- Different income levels – the higher earner makes the contributions, the lower earner receives the split
- Cash flow needs – you want access to some of that super money sooner rather than later
The strategy is particularly powerful for couples where one partner is 60 or over (and can access super) while the other is still years away from preservation age.
The Technical Details
You can split up to 85% of concessional (before-tax) contributions made in the previous financial year. So if you contribute $30,000 in FY2024, you can split up to $25,500 of that amount in FY2025.
The split contribution counts towards the receiving partner’s concessional contribution cap, so you need to make sure you don’t accidentally push them over their annual limit.
And here’s something important: once you split the contributions, they’re locked in the receiving partner’s name. You can’t reverse the decision later.
Why This Strategy Flies Under the Radar
Most people think super is just “set and forget” – make your contributions and wait until 60 or 65 to access the money. But the super system has way more flexibility than most people realise.
Super splitting has been around for years, but it doesn’t get much attention because:
- It requires specific circumstances to be worthwhile
- The rules can seem complicated (they’re really not)
- Most people don’t know it exists in the first place
The Bottom Line
If you’re in a couple where one partner can access their super but the other can’t, and you’re making decent contributions to super, this strategy is worth exploring.
It’s not about getting around the rules – it’s about using the rules intelligently to make your money work better for your household.
Pete and Sandy went from feeling financially squeezed to having their cash flow sorted, all while maximising their tax benefits. The strategy was sitting right there in the super rules, waiting to be used.
Your situation might be different, but the principle remains: sometimes the best financial moves are the ones hiding in plain sight.
Any questions or concerns?
If you’re ready to take the first step, it all starts with having a conversation about your financial goals.
Marcus Larcombe
Financial Adviser
Apex Advice – Geelong Financial Advisers for professionals and tradies who want to organise, grow and spend their money with confidence.
Note: The information contained in this update has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs.
You should seek advice before making any decision regarding any information, strategies or products mentioned to consider whether that is appropriate to your own objectives, financial situation and needs.
