So, what is ‘the give-up, get-back ratio’? ...
So, what is ‘the give-up, get-back ratio’? Another way to phrase it is: what can I give up today to get back something better later on? You guessed it – we’re talking about investing your money. And with your money in the right place, it will grow yearly (assuming you don’t withdraw from it) and eventually, you will get back much more than you put in.
As an example, we’ll look at giving up $100 a week for 15 years, and what would happen to the money in that time.
We are assuming that you start putting this money aside when you are 50 years old. If you retire at 65, then the money will have been put aside for 15 years. (Of course, we are assuming that your retirement savings are in order, and we can consider this $100 a week as an ‘extra pot’ of money. So, if you retire at 65 and withdraw from that pot of money for another 15 years, then run out, it’s no problem).
Many of our clients like to refer to this extra bit of money as their travel pot. It’s extra money on top of everyday living expenses which is then used for travel. So how much is it, exactly? Well, if you start putting away that $100 each week when you’re 50, you will have $166,983 by the age of 65 due to factors like compounding, rate of return and savings on tax. Not bad for a bit of extra ‘play money’, is it? This works out to be $360 a week, or $18,750 a year for 15 years. So essentially, when you retire, you could have an additional $18,750 to travel with EACH YEAR. As Michael’s favourite saying goes, this is your money getting dressed and going to work for you.
What’s the best way to go about it? Look for small ways in which you can cut down weekly expenses. For example, if a small expense of $10 dollars a week could be reduced to $7.50, that’s a start. It’s all about the small sacrifices. Small changes over time make a big difference. It’s not the amount that’s important – it doesn’t have to be $100 a week that you put into your super, that’s just our example. It’s the ratio that’s important – what you put in; what you get out.
We have another podcast called Turning $100 per week into $100,000 in which we discuss this in more detail. One thing some people do is salary package, where money from their employer automatically goes into their super without being taxed at the standard income tax rate. In this scenario, $150 is taken from their pay check, but they’re only out of pocket $100 considering what they would be receiving after paying income tax. We really think that superannuation is a beneficial thing for people, especially based on the fact that the money’s taxed on the way in, but not on the way out. In fact, superannuation is taxed at 15% going into the fund which is a lot lower than income tax. And it’s possible to make additional contributions on top of what employers are already putting in.
When you retire, you are able to move your super funds into a 0%-tax super income stream (with a limit of $1.6 million per individual – so a couple can have up to $3.2 million). Then, your rate of return goes up from 6.8% to 8% as you’re no longer paying tax on that money.
At Money Over 50, we like discussing trade-offs. Rounding up here and there and making small sacrifices now could get you an $18,750-a-year holiday once you retire. Where do we sign?

This blog, which correlates to our podcast on The Give-up, Get-back Ratio, contains financial advice that you can start implementing tomorrow – or even today!
Published by Dallas Davison, Michael Hogue and Ali Hogue. January 20, 2021