Would you rather $10,000 in cash right now or $50,000 in your super? · Finder/Getty
Everyone loves to play a bit of ‘would you rather?’ — the game where you pose hypothetical decisions and make people choose an option.
So here’s one for you: would you rather receive $10,000 straight into your bank account today, or have $50,000 deposited into your superannuation?
At Finder, we regularly survey Aussie consumers to gauge people’s attitudes and behaviours around money.
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For most of the questions we ask, I know exactly how I myself would answer it.
But I’ll be honest, this one initially had me a bit stumped.
Of the 1000+ Aussies we surveyed, 51 per cent would choose the $10,000 today, while 49 per cent would opt for the $50,000 into their super fund.
Being an almost exact 50/50 split, it’s clearly a choice that has Aussies divided.
So, let’s delve into the pros and cons of each option (and see which one I’d choose at the end).
There are a number of obvious benefits to taking the $10,000 cash and running.
The main one being that you get it right away.
With the current cost-of-living crisis, $10,000 would be a huge help towards sky-high energy bills, expensive groceries and never-ending health insurance price hikes.
If you had any high-interest debt, such as a personal loan or credit card debt, taking the $10,000 and using it to pay this down would be a really smart move.
Similarly, if you’re living paycheck to paycheck without any emergency savings, taking the cash and putting it into an emergency fund is a good idea to help cover any unexpected expenses that could put you into financial stress.
Then there’s the benefit of being able to choose how you invest it — rather than it being invested for you in your super.
You could put it towards a house deposit, invest it in the sharemarket or even buy some cryptocurrency.
If you’re lucky, you could turn that $10,000 into a whole lot more (but the opposite is also true – you could lose it pretty quickly if the market takes a turn).
The benefit of buying shares yourself outside of your super is you can sell them and cash in whenever you want. In your super, it’s locked away until retirement.
The Finder survey found that young Australians are the most likely to opt for the cash, with a whopping 63 per cent of Gen Z admitting they’d take the money now, compared to 44 per cent of Gen X.
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But ironically, young Aussies would benefit more than any other generation by doing the opposite. Let’s get into that now.
Firstly, the most obvious downside of this option is that you can’t access the money until you retire.
Nope, not even one cent.
If you’re in your 20s or 30s, that means waiting at least 30 – 40 years before you can access it.
But the benefit of this option is that it’s more money.
Not only is $50,000 more than $10,000, but that $50,000 will be worth even more by the time you can access it thanks to compound growth.
For example, let’s assume you’re 35, earning an $80,000 salary and have a current super balance of $50,000. According to the moneysmart super calculator, you’d retire with $500,835.
Now let’s use the exact same situation but add a one-off $50,000 contribution to your fund. You’d now be looking at a retirement balance of $609,231. That’s $109,000 more!
This is also based on an average return for a standard super fund – you could be looking at an even higher return if you’re in a high growth super fund. And the younger you are, the longer your money will be invested so the more you stand to benefit from making an extra contribution.
Although the $10,000 cash is hugely tempting and could be a great help with some of my current expenses, I’d choose the $50,000 in my super.
This is partly because I don’t have any high-interest debt to pay down and I already have an emergency savings buffer. But it’s also because I’m only in my 30s – I still have a good 30 odd years for the money in my super to grow and I know that $50,000 would be worth a great deal more when I retire.
That’s just an offer that’d be too good to refuse! If only it were real.
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