Should you put spare cash into a savings account or superannuation? It may be a question you’ve asked yourself before, especially if you’ve just started to think about retirement and strengthening your financial position.

Essentially, putting your money into either can be a positive move. But is there an option that’s better for you? And what do you need to know to decide either way?

Things to consider

One of the key reasons to direct your spare cash into either a savings account or super is security. Both can offer you a sense of comfort in regards to the future.

But how far into the future are you planning for? Do you simply want to set aside some savings as a kind of financial buffer, or do you want to "lock away" money now that you may not be able to spend for decades?

A financial buffer may provide a fall-back pool of money in the event of sickness, or an accident. It would enable quick access to funds to address that surprise.

It might even come in handy if you find yourself having an interruption to income because you’re between jobs, or a substantial unexpected expense.

Do you need a financial buffer?

For this reason, you need your buffer to be readily accessible. If all your savings are tied up in super, you may not be able to access them until you retire after reaching your preservation age, which is between 55 and 60, depending on your date of birth.

Use MoneySmart's calculator to figure out when you can get your super.

By comparison, a savings account or even a term deposit (despite some potential fees for early access) may be more suitable should you need the money urgently. But this can be both a positive and a negative.


As always, a significant part of your decision should be to decide the return you’re looking for versus the amount of risk you’re looking to take.

Superannuation and the contributions you or your employer might make may not just sit in an account accumulating interest like in some savings accounts.

The money is invested, whether you choose how it is invested or not, and depending on the success of those investments, the total amount can rise or fall. Your super might be invested in shares, property and infrastructure amongst many other asset classes.

With superannuation, there are limited conditions of release that govern when you can access your benefits. It’s a long-term investment designed to generally be inaccessible prior to retirement, so you have to be sure that any extra contributions you make you won’t likely need back in a hurry.

Tax breaks

How much you earn from your salary and other investments will also shape when and how much you may want to contribute to both your super and your savings account.

The tax rate on interest that you get from your savings account may be greater if you have a higher taxable income and subsequently fall into a higher marginal tax bracket.

Super does offer some tax advantages that savings accounts don’t – potentially on both the money you put into your super and the money earned from the investments inside your super.

In the first case, there are potential tax concessions in putting extra into your super via salary sacrifice.

This basically means you ask your employer to redirect a greater portion of your pay, before tax, to your super fund than the required 9.5% super guarantee.

The amount you 'sacrifice' is then taxed at a rate of 15% in most cases. Depending on your personal income tax rate, this is likely to be less than what you would have paid had you received this money as regular income and paid tax on it at your marginal tax rate.

Although, you do need to remember there are caps on how much you can put into your super before tax and continue to receive the 15% rate. The Australian Taxation Office website is the best place to view the latest update to these caps.

In the second case, investment returns earned inside your superannuation account are also taxed at a maximum rate of 15%. If you invest outside your super, returns from the same kinds of investments may instead be added to your taxable income, with your marginal tax rate likewise applied.

The Australian government's MoneySmart website explains how this works in more detail.

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Things you should know

Things you should know: This web page contains general advice. It does not take account of your objectives, financial situation or needs. You should consider talking to a financial planner before making a financial decision.

This web page has been prepared by Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, (Commonwealth Financial Planning) a wholly-owned, non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124. Commonwealth Financial Planners are representatives of Commonwealth Financial Planning. 

Information in this web page is based on current regulatory requirements and laws, which may be subject to change. While care has been taken in the preparation of this web page, no liability is accepted by Commonwealth Financial Planning, its related entities, agents and employees for any loss arising from reliance on the information contained in the web page.

Commonwealth Financial Planning is registered with the Tax Practitioners Board as a Registered Tax (Financial) Adviser. However your Financial Planner is not a Registered Tax Agent. Consequently, tax considerations are general in nature and do not include an assessment of your overall tax position. You should seek tax advice from a Registered Tax Agent.