Superannuation is something we’re all aware of, and probably something you understand to an extent. But it’s easy to consider it a down-the-track-issue that doesn’t need any attention for years. Not true! We’re making a case for why you need to care about your super, now.
Superannuation = dollar dollar bills (and they’re yours).
When an asset isn’t in your immediate reach, especially when it’s not something you can use until you’re of retirement age, it’s easy to forget about. Superannuation is real money that you have earned, sitting in an account for you to use at a later date. You should care about that! Retirement is expensive. Make the most out of what is effectively a long-term savings account and reap the maximum rewards in years to come.
You can save a lot of money through superannuation if you’re smart about it
Let’s take a page out of our Barefoot Investor post. The fifth step of Scott Pape’s strategy is to supercharge your wealth. Ideally, you’d boost your super contributions from 9.5% to 15% every year. Considering your employer is already contributing that 9.5%, the difference is only 5.5%. Using an example, a young person earning $ 72,000 who ups their super contribution will be putting an extra $330 per month away. Remember this is money you never see so you’ll barely feel it- if at all. Assuming a realistic growth and inflation rate, they will end up with around $550,000 more in their super by the time they’re 67. That’s the difference between being able to retire, and being able to retire comfortably.
There are billions of dollars in unclaimed superannuation funds
Do you know where your super has been going from every job you’ve ever had? If you’ve moved house and forgotten to update your details with your fund, or your employer entered your details incorrectly, or you worked somewhere for a short period of time without nominating a fund, chances are you’ve got some cash floating around in the super universe. Sort this out ASAP because you want every cent of your hard earned in a fund that you have access to.
You can contribute to ethical businesses with your superannuation
Super funds take your money and they invest it. You can choose a fund that aligns with what you feel is important. For instance, you can invest with someone who supports innovation, recycling, clean energy and sustainability. Put your cash behind the industries you believe in and make a difference whilst saving money.
You could be paying fees to multiple superannuation funds. Essentially, throwing money down the toilet.
A lot of people can’t even name their super fund. Can you? Cbus? Australian Super? Do you have any idea if your money is in multiple funds? If it is (and it certainly could be if you haven’t kept track since your first form of employment), then you’re potentially paying admin fees to numerous people. To fix the issue you can simply search for them online with your TFN.
Superannuation often comes with insurance (the kind that you need).
Whilst it’s morbid to think about, we all need life insurance, trauma insurance, income protection and total and permanent disability insurance. These can often go unnoticed and a lot of you may not be covered for all four. Superannuation funds often provide these as part of the service. They often cover you for the minimum amount but you’re able to increase and decrease cover through your fund. It can be much cheaper to do it this way and some funds will automatically accept you for cover without having to do a health check.
Whilst using your super might be a while off, putting some thought into it now and making smart decisions will mean you can reap the maximum rewards when you get to retirement. Any financial planning issues or questions? Don’t hesitate to contact us.