Want to make the most of a recent pay rise? Here’s how putting it into super could add up over time
Got some extra income and wondering how to make it really count? Instead of letting it quietly disappear into everyday spending, channelling a little extra into your super could make a surprising difference over time. We break down what an extra $2,000 a year could mean for your future retirement income.
5 min read
Key takeaways
- Making regular voluntary super contributions is a great way to boost your super balance and your future retirement income.
- A pay rise can be a natural moment to consider setting up regular super contributions, if it suits your situation.
- A lower tax rate paired with compounding returns makes super a cost-effective way to grow your wealth.
- Turning a pay rise into regular super contributions also ensures your pay rise isn’t eaten up by things like lifestyle creep, where an increase in discretionary spending can eat away at any increase in income.
- While extra contributions can increase your balance, how that turns into retirement income later can depend on the type of income stream you choose.
- To illustrate this, we’ve modelled how an extra $2,000 a year could affect the retirement outcomes of an average Australian.
How can I make the most out of a recent pay rise?
There’s no "right” way to use a pay rise. Some people put it straight towards everyday costs, others enjoy a little extra breathing room, and many do a bit of both.
One thing that can happen almost without noticing, though, is lifestyle creep: as income goes up, so do everyday expenses, until the pay rise quietly disappears.
If you’re looking for an alternative, one option is to direct some – or all – of a pay rise into your super as an extra contribution. It’s a simple way to put that extra income to work for your future, without needing to make complex decisions.
To show what this could look like in practice, our retirement experts modelled the impact of contributing an extra $2,000 a year to super over time. Here’s what they found.
How does putting money into super make it work harder?
Making additional regular contributions to your super can be a cost-effective way to grow your wealth over time. This is thanks to a number of reasons unique to superannuation.
Compounding returns: Super is a long-term investment and uses the power of compounding returns to grow your balance. Even relatively small contributions, made consistently, can add up to much more over time than you might expect.
Concessional tax rates: Super is also taxed at a lower rate than the rest of your income and investments for many people, which means more of your money can stay invested, provided you’re below the cap for concessional super contributions.
Claimable tax deductions: Some people can also claim a tax deduction for certain voluntary contributions, but the rules can vary depending on your situation.
Should I put my pay rise into my super?
Whether putting your pay rise into your super is right for you will, of course, depend on a few things, such as your age, how far away you are from retirement, your current super balance, your retirement goals, and your overall financial situation (e.g. if you have significant credit card debt).
We wanted to see what kind of balance and income an average Australian might have in retirement if they contributed an additional $2,000 a year to their super, compared with if they didn’t contribute anything extra at all.
In each of our scenarios, making additional voluntary super contributions increased the average Australian’s super balance at retirement by substantially more than amount of money put in.
To keep things realistic, the modelling is based on data from the Australian Bureau of Statistics (ABS) and uses a representative “average Australian”: a 39-year-old female earning $88,000 a year, with a super balance of $62,000. Let’s call her Liz.
If Liz made no extra contributions, the modelling suggests she could have around $450,000 in super by age 67, supporting a retirement income of about $38,000 a year, on average, in the first 10 years of retirement.
By setting aside an extra $2,000 pay rise each year – roughly $38 a week – Liz’s balance could grow to $515,000 by age 67, supporting a retirement income of around $41,000 a year over the first 10 years of retirement. That’s an extra $65,000 in their balance, and about $30,000 more in total income across the first decade of retirement than if she hadn’t put that money into super.*
What is a Lifetime solution in retirement and how does this change things?
In retirement, how long your income lasts can matter just as much as how much super you have. That’s where Lifetime solutions come in.
Unlike a standard account‑based retirement stream, where your income depends on how long your balance lasts, a Lifetime Retirement Income Stream is designed to keep paying some income for as long as you live. How much income you receive will depend on how much you choose to allocate to it.
This can provide:
Regular payments for life
Some protection against longevity risk (the risk of outliving your savings)
Greater certainty and confidence alongside other retirement income sources
Many people choose to use a mix of retirement income account options in retirement combining flexibility from a Flexible Retirement Income Stream with the stability of a Lifetime Retirement Income Stream.
This is where AMP Super’s Lifetime Boost comes into the picture.
Lifetime Boost is a feature that works in the background of your AMP Super account. It is designed to help you maximise your retirement income by changing how your super assets are assessed in the future when it comes time to determine your eligibility for the Government Age Pension with an expectation that you could convert some of your super into Lifetime Retirement Income Stream. You can learn more about Lifetime Boost here.
Thinking back to our average Australian, Liz, if she switched on the Lifetime Boost feature earlier – for example, at age 39 – it wouldn’t change how her super balance grows over time, and there are no extra fees or obligations.
Later on, if Liz chooses to use a mix of retirement income streams in retirement – such as splitting their super between a Flexible Retirement Income Stream and a Lifetime Retirement Income Stream – the modelling suggests her income could be higher again. In this scenario, her average income over the first 10 years of retirement could increase to around $55,000 a year.
That’s around $140,000 more income over the first decade of retirement compared to not using Lifetime Boost, and around $170,000 more compared to if she hadn’t made any additional contributions at all.**
What an extra $2,000 a year could mean over time for Liz
| Extra contributions | Retirement balance | Yearly income (Ave. over first 10 years) |
| None | $450,000 | $38,000 |
| $2,000/year | $515,000 | $41,000 |
| $2000/year + Lifetime Boost | $515,000 | $55,000 |
With all that in mind, what should I do?
What you do with a pay rise is a personal choice, and what works best will always depend on your own circumstances and goals.
What this modelling shows is simply that small, regular decisions – made at the right moment – can have a meaningful impact over time. And a pay rise is one of those moments when it’s easier to pause and make a choice that your future self might thank you for.
If you earn more or less than average or have a higher or lower super balance, the outcomes will differ as, depending on your circumstances, the Government Age Pension eligibility will also differ. It’s also important to remember that a higher super balance doesn’t always translate to a higher retirement income straight away, as Age Pension eligibility can change over time as your super balance is drawn down.
If you’d like to explore what this could mean for you, tools like AMP’s Retirement Simulator can help you see how your super might grow over time and how different contribution choices could play out. It’s always worth speaking to an adviser to work out what’s right for you. AMP Super members also have access to Digital Financial Advice for no extra fees, where you can book in sessions to talk to a financial adviser about contributions, pensions and more.
What you do with a pay rise is up to you, but taking a moment to consider your super can be a simple step with long‑term impact.
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Important Information
* This information is illustrative only and does not replace financial advice. Our average Australian in this illustration is assumed to be a single female aged 39, with a $88k salary and a $62k super balance, based on ABS data. Figures are shown in today’s dollars by adjusting for 3% annual inflation. Assumes 100% invested in an account-based pension and they drawdown at the statutory minimum rate from their account-based pension. Assumes annual investment returns of 6.33%, super contributions of 12% of salary, wage growth of 3% p.a., and the current tax and Age Pension rules and rates. Assumes if the additional $2,000 is not invested into super, then it is invested outside super with the same investment return.
** This information is illustrative only and does not replace financial advice. It illustrates the potential benefits for an average Australian with the AMP Super Lifetime Boost feature activated for 28 years leading up to retirement, who allocates their balance 50/50 between an AMP Lifetime Pension and an AMP Allocated Pension. Our average Australian in this illustration is a single female aged 39, with a $62k super balance and $88k salary. Figures are shown in today’s dollars by adjusting for 3% annual inflation. Assumes when they reach age 65 and meet the full condition of release, they invest 50% in a lifetime pension and keeping the rest in super and convert in an account-based pension at age 67. Assumes they drawdown at the statutory minimum rate from their account-based pension. Assumes annual investment returns of 6.33%, super contributions of 12% of salary, wage growth of 3% p.a., and the current tax and Age Pension rules and rates. Assumes if the additional $2,000 is not invested into super, then it is invested outside super with the same investment return.
Lifetime Boost is a feature of AMP Super which is issued by N.M. Superannuation Proprietary Limited ABN 31 008 428 322 AFSL 234654 as trustee of the AMP Super Fund ABN 78 421 957 449. Any advice is general only and provided by AWM Services Pty Ltd ABN 15139 353 496 AFSL 366121.
Products in the AMP Super Fund and the Wealth Personal Superannuation and Pension Fund are issued by N. M. Superannuation Proprietary Limited ABN 31 008 428 322 (NM Super), who is part of the AMP group.
AMP Super refers to SignatureSuper® which is issued by NM Super and is part of the AMP Super Fund (the Fund) ABN 78 421 957 449. ® SignatureSuper is a registered trademark of AMP Limited ABN 49 079 354 519.
Any advice and information is general in nature. It hasn’t taken your financial or personal circumstances into account. You should seek professional advice before deciding to act on any information in this article. It’s important to consider your particular circumstances and read the product disclosure statement (PDS) and Target Market Determination (TMD) for AMP Super (SignatureSuper), available from AMP at amp.com.au, or by calling 131 267, before deciding what’s right for you.
You can read our Financial Services Guide https://www.amp.com.au/financial-services-guide online for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services it provides. You can also ask us for a hard copy. All information on this website is subject to change without notice.
The AMP Lifetime Pension is not currently available but is expected to be available in 2026. The issuer of AMP Lifetime Pension is NM Super. The TMD and PDS for AMP Lifetime Pension is expected to be available in mid-2026 on www.amp.com.au/resources#pds. Please review the PDS before deciding to acquire or hold the Lifetime Pension as there may be features or conditions of the Lifetime Pension that may not be suitable to you. NM Super may withdraw or change the Lifetime pension in the future and therefore these benefits may not apply.