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08 January 2020
Superannuation is for the oldies, right? In some ways that’s true, but even in your twenties there are good reasons to take a bit more interest in your super.
The average 25-year-old has about $10,000 in super, but the decisions you make now, even with relatively small sums of money, could earn you hundreds of thousands of extra dollars over your working life.
Are you getting any super?
If you earn more than $450 in any given month then every three months your employer should be paying 9.5 percent of that into your super fund. Usually you can choose your fund; if you do not, it gets paid into a super fund of your employer’s choice.
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If you don’t know if your super is being paid, or the fund it’s being paid into, ask your employer. If you think you’re missing out, search ‘unpaid super’ on the tax office website – ato.gov.au – to see what you can do. This is your money.
Where have you got it?
Had more than one job? If you have a lot of little super accounts the money can disappear in a puff of fees and insurance premiums. Simple fix – combine your super into one account.
Is it working for you?
Your money is going to be stuck in super for a long time, so you want it to be working hard for you. Most funds offer a range of investment choices and some will do better than others.
What do you want?
Buying a new car. Travelling. Having fun. Let’s face it, there are lots more exciting things to do with your money than sticking it into super. The choice is yours, but think about this:
• If mum and dad retired this year, they would need a minimum of around $61,500 a year to enjoy themselves. If that doesn’t sound like much now, by the time you retire inflation could have pushed that annual amount to around $216,472. That means you will need to have at least $3.74 million in savings! Sure you’ve got 40-plus years, but that’s still a lot of money to save up! It can be done if you start early enough – and you don’t need to miss out on enjoying life now.
• Fact: you’re going to live much longer than your parents and grandparents. Can you imagine living another 30 years without earning an income? A sound investment plan designed to make your super work hard while you’re employed will be the difference.
• Starting early and adding a bit extra when you can makes a big difference. Let’s work on another 40 years before you can retire. If you start now by making an extra post-tax contribution of just one percent of your annual income to super – $350 from a $35,000 salary – and the government could add to that with a co-contribution at an eight percent investment return, it could add an extra $149,000 to your retirement fund.
If you wait 20 years before starting to make that extra contribution, you’ll only get a boost of $49,000, that is $100,000 less.
Continuing this small extra contribution as your salary increases will turbo boost your super fund balance.
So, still find super boring? That’s okay, you’re not alone. But instead of finding the time to organise all this yourself, contact a licensed financial adviser who will review your current super, any insurance required, the investment choices and prepare a strategy to get your super into shape – then you can get back to enjoying life.
The entire January 8, 2020 edition of The Weekly Advertiser is available online. READ IT HERE!