It is super common (don’t mind the pun) to see millennials not caring much about their super! Why’s that you might ask? Well I put it down to them thinking, “this isn’t our money”, or “we can’t use this for ages, so this is tomorrow’s problem”. Yes you probably can’t access it for 30-40 years but when that time comes you will be kicking yourself that you didn’t consolidate your super funds, review your investments, made additional contributions or in fact just started treating it like it is your money- because it is!
So, why should you care about your super?
Apart from me being a complete finance nerd, I am actually super excited about my future. The idea of being financially stress free, and to take it a step further, financially enabled to live my best life gets me really pumped. So much so that I want to ensure I can continue living like that throughout my retirement. Knowing that superannuation is still the most tax effective vehicle we have in Australia means I will do anything I can to take advantage of that. By doing so it will help me live out my golden years sipping back on a few James Squire’s while busying myself with few projects on our future family farm… hello heaven!
Let’s assume to achieve this glorious life that you started saving early, and saving hard. Allocating around 10% of your wage since you started working into savings or investments. You would have an amazing little nest egg by now. I’m assuming if you had been doing this and you had around $40,000* sitting in an account you would be paying it the attention it deserves. Well, guess what, you have. It’s called super!
Studies and experience show us that when you get to retirement your super is likely to be your either your biggest or second biggest asset, next to your home. Currently 9.5% (which is likely to increase) of your wage goes to your super and that adds up over your working life! So, I think it’s about time to get your super working harder for you.
So, let’s get excited about super and see where you can start:
- Find any lost super funds- this can be done by signing up for a MyGov account to see which companies you have had super with and if the ATO holds onto any super for you
- If you make multiple accounts, it may be appropriate to roll these into one to reduce your overall costs. Although there are reasons to hold multiple accounts particularly for insurance benefits, this should be discussed with your financial adviser before consolidating them
- Look at where your money is invested – you have options available to you and a lot of us aren’t invested correctly according to our comfort level with investing and how long until you retire
- Super is great to fund some costs, but make sure you know what you are paying and getting value for money. These fees may include administration costs, investment related fees, adviser fees and insurance premiums
- Start contributing additional funds to your super- there are before-tax (salary sacrifice) and after-tax ways of doing this
- While you are looking into your super- look at your death nomination and insurance to ensure you have these setups to your preference. There are a lot of regulations around who you can and cannot nominate, you can check out our fun fact about it here.
The sooner you take action the more likely you are to start compounding and reaping the benefits. This is going to make a huge difference between financially surviving, and financially thriving!
Side Note: As a millennial the challenges of buying your first home are real! Super can assist with this though the First Home Savings Scheme. This is only if you are buying your first home buyer and adding additional before tax contributions. These additional contributions may be used to purchase your first home. There are restrictions such as only being able to add $15,000 per annum with a maximum of $30,000 in total over all the years. For further information we suggest seeking appropriate assistance or talking to your super fund about the limitations.
Good luck with sorting your super out, start taking action, seek quality financial advice and your future self will thank you!
* For individuals aged 30 to 34 in 2015-16 average balances were around $43,580 for men and $33,750 for women. https://www.superannuation.asn.au/ArticleDocuments/359/1710_Superannuation_account_balances_by_age_and_gender.pdf.aspx?Embed=Y