The short answer? For most Australians on above-average incomes with more than 10 years until retirement, salary sacrifice into super wins on the maths because of the tax saving on concessional contributions. For those close to retirement, on lower marginal tax rates, or who value certainty over expected return, extra mortgage repayments can genuinely be the better call. And the Age Pension interaction, which almost every generic calculator ignores, can shift the answer again.
This guide walks through both sides with the 2026-27 tax and contribution cap figures, covers the Age Pension mechanics most people miss, and gives you a framework by life stage rather than one universal answer.
The spreadsheet case for super
On a pure spreadsheet basis, super typically wins for anyone on a decent income under Australia’s 2026-27 tax rates. Here is why. When you make an extra mortgage repayment, you use after-tax dollars. If you earn $100,000 and want to put $10,000 extra toward your home loan, you have already paid income tax on that money. At $100,000, your marginal rate is 30% plus the 2% Medicare levy, or 32% effective marginal. You are paying down debt with money that has already been taxed.
When you salary sacrifice into super, that same $10,000 goes in before tax. It is taxed at 15% inside the fund instead of your marginal rate. The comparison at $100,000 income looks like this: salary sacrificing puts $8,500 to work in super for the same reduction in take-home pay that would only give you $6,800 to apply against the mortgage. That is roughly 25% more capital working for you, before you consider investment returns inside super. The gap compounds over years, and it widens further for higher income earners: at $135,000 or above, where the 37% marginal bracket starts (39% with Medicare), the tax saving on salary sacrifice grows again.
Please note: All figures, projections and scenarios in this article are approximate and for illustrative purposes only. Individual outcomes will vary based on personal circumstances, investment returns, fees, interest rates and current government policy. This is general information, not personal advice.
The concessional contributions cap for the 2026-27 financial year is $32,500, up from $30,000 in 2025-26. This cap includes your employer’s Superannuation Guarantee (12% since 1 July 2025). If your employer pays $10,800 in SG (12% of a $90,000 salary), you have $21,700 of concessional cap remaining for salary sacrifice. For anyone whose total super balance is under $500,000, unused concessional cap space from the previous five years can also be used as catch-up contributions on top of the annual cap. Source: ATO concessional contributions cap. Current as at September 2026.
The case for the mortgage: certainty
If your mortgage rate is 6%, every extra dollar you put on the loan saves you 6% interest. That is a certain, risk-free, after-tax return. Super returns are not guaranteed. A balanced or growth fund averaging 6 to 8% per annum long-term is reasonable to expect, but those returns come with volatility. A bad market year or two just before retirement can hit your super balance in a way that mortgage repayments never can.
The closer you are to retirement, the more that matters. A 58-year-old with a $150,000 mortgage balance and 8 years remaining on the loan sits in a very different position to a 42-year-old with a $450,000 mortgage and 22 years to go. For the person close to retirement, the certainty of being debt-free by 60 or 62 may be worth more than the theoretical super advantage.
There is also an access issue that spreadsheet-based calculators generally ignore. Money in super is locked until preservation age (60 for anyone born after 30 June 1964) and a condition of release. Extra money in the mortgage, through a redraw facility or an offset account, generally stays reachable if life changes. For anyone whose income or family situation is uncertain, that flexibility has real value the spreadsheet never prices.
Scott and Phil spent a whole episode on exactly this question:
The episode covered the finding that around 40% of Australians in their late 50s still carry mortgage debt heading into retirement. For anyone in that group, this decision is not abstract. As Phil put it: “Financial planning is a funny thing. You’ve got one answer on a spreadsheet, but you’ve got the other answer that takes into account living, breathing people with emotions.”The Age Pension twist most calculators miss
Here is the point that generic mortgage-versus-super calculators almost never include, and it can materially change the answer. Your family home is completely exempt from the Age Pension assets test, regardless of its market value. Super is not.
This means that money sitting inside super at 67 is assessed by Centrelink under both the assets test and the income test (via deeming). Money you have used to pay off your home sits inside an exempt asset. For some Australians, particularly those with moderate super balances that sit near the Age Pension thresholds, having more home equity and less super can genuinely increase Age Pension entitlement.
Phil and Dan walked through the specific mechanics of the assets test and income test using real case studies in Episode 10 of the Wealthlab Podcast: How the Age Pension Really Works. For anyone within 10 years of retirement still carrying a mortgage, this is worth understanding properly before deciding. Getting the structure right around the means tests is the focus of our pension and Centrelink advice.
Paying off the mortgage with super at 60
At 60, the question changes shape, because you can access super and the emotional side of debt freedom often carries real weight. Scott put it directly on the same episode: “I take the opposite perspective. I like to see people have a little bit of juice in the tank.”
The spreadsheet might say keep super earning 6 to 8% while the mortgage sits at 5 to 6%. But walking into retirement with a $200,000 debt on a fixed income is a genuinely different kind of stress. For many people, the emotional value of being debt-free at 60 is worth the theoretical foregone return. If paying off the mortgage at 60 means drawing from super to do it, that needs careful modelling to avoid unintended tax consequences or Age Pension impacts. But it is a legitimate choice, not a bad one.
Where the offset account fits
An offset account attached to your mortgage saves you interest at your full mortgage rate, just like an extra repayment. But the money stays accessible. If you are stretched with a large loan, young children and no emergency buffer, an offset account often makes better sense than either extra repayments or super, because it saves interest at your mortgage rate while keeping the money within reach. We generally find the offset is the natural home for surplus cash in the years when life is most expensive and least predictable, with super taking over as the buffer builds and retirement gets closer.
A framework by life stage
Rather than one universal answer, the right split usually depends on where you are in your working life.
Higher-income earners with 15-plus years to retirement. Super is generally the stronger use of extra money, because the 30% marginal tax bracket now starts at $45,000 (Stage 3 rates from 1 July 2024) and salary sacrifice saves you the difference between your marginal rate and 15% on the way in. You also have 20-plus years of compounding ahead.
Stretched households with young children. If the loan is large and there is no emergency buffer, the offset account often makes better sense than either option, for the flexibility reasons above.
Mid-40s to late 40s. There is no universal switch date, but this is generally when super begins to make more sense as the primary priority, because the mortgage is smaller, retirement is closer, and the super lock-up matters less with access at 60 coming into view.
At or near 60. Access opens up and the emotional weight of debt freedom often decides it. The trade-offs shift from tax arithmetic to Age Pension structuring and sequencing risk, which is where modelling the specific numbers earns its keep.
Want to see how your own balance sits before deciding where the next dollar goes? Run your numbers through the free Wealthlab super calculator. It takes two minutes and beats guessing.
Frequently asked questions
Should I pay off my mortgage or put money in super? For higher income earners (typically above $60,000), salary sacrifice into super usually wins mathematically because of the tax saving on concessional contributions. For people close to retirement, on lower marginal tax rates, or with mortgage rates close to expected super returns, extra mortgage repayments can be the stronger option. The Age Pension interaction also matters: your home is exempt from Centrelink’s assets test, but super is not, which can shift the answer for balances near the pension thresholds.
Is my home counted in the Age Pension assets test? No. Your principal home is completely exempt from the Centrelink assets test regardless of its value. Super, once you reach Age Pension age, is assessed under both the assets and income tests. For Australians near the assets test thresholds, having more equity in a paid-off home and less in super can materially increase their Age Pension entitlement. This is one of the most overlooked factors in the mortgage-versus-super debate.
What is my marginal tax rate at $100,000? At $100,000 taxable income, your marginal rate is 30% (income above $45,000 sits in the 30% bracket under Stage 3) plus the 2% Medicare levy, for an effective marginal rate of 32%. This is the rate on your next dollar of income. Your effective (average) tax rate is lower, at around 22 to 23%, because the tax-free threshold and the 16% bracket apply to your first $45,000.
Can I use catch-up concessional contributions? Yes, if your total super balance was under $500,000 on 30 June of the previous financial year. Unused concessional cap amounts from the past five financial years can be carried forward and used on top of the current year’s $32,500 cap, which suits people who focused on the mortgage earlier and now want to accelerate super.
Can I use my super to pay off my mortgage? From 60, once a condition of release is met, super can generally be withdrawn tax-free from a taxed fund, and some retirees use part of it to clear the mortgage. Whether that helps or hurts depends on the numbers: it reduces assessable assets for the Age Pension but also removes capital from a tax-advantaged environment. Before preservation age, access is limited to strict hardship and compassionate grounds. This is a decision worth modelling properly rather than defaulting either way.
When should I switch from paying the mortgage to boosting super? There is no universal age, but the mid-40s to late 40s is generally when super begins to make more sense as the primary priority, because the mortgage is smaller, retirement is closer, and the super lock-up matters less. Whether that timing suits your situation depends on individual factors like job security, family costs and your buffer outside super.
Your next step
The right answer to mortgage-versus-super is genuinely different for each household, and it depends on your income, mortgage balance, super balance, distance from retirement, and whether your partner has their own super and income. Anyone offering a universal answer without knowing those specifics is offering a generic view, not real advice.
If you want to talk through how this decision plays out for your specific situation, book a free chat with the Wealthlab team. No jargon, no pressure.
Not ready for a call? Take the free Wealthlab retirement quiz for a general snapshot of where you stand.
