You’ve just graduated from university and started your first job. The last thing you’re probably thinking about is your super. The thing is, if you make some small changes early on when it comes to your super you’ll be miles ahead down the track (and you’ll be thanking your 20-year-old self).

Our super is the money that’s supposed to fund our retirement, but because that’s so many decades away, we often disregard the line on our paycheck which mentions our super. So let’s start talking about it!

What Exactly is Super?

Superannuation (commonly referred to as super) in Australia can be incredibly complex, and there are a few things to be aware of early on to ensure you don’t overpay management fees or insurances, lose track of it and miss out on the chance to maximise your super in your 20s. Super is the money that your employer and you put aside across the course of your career, to make sure you’ll have enough to live on during retirement.

Generally, your employer will send a minimum of 9.5% of your salary to your chosen super fund, or if you don’t make a choice, they will send it to the workplaces default fund. You are also able to add additional funds into your super account, and you should always check with the ATO for the current contribution limits and incentives. You usually won’t be able to withdraw your super until around 65, even if you’re still working.

Age you can access your super (preservation age)

Source: ASIC MoneySmart

What Choices Do I Have?

The great thing is that most employees in Australia can choose where they want their super paid into. This gives you the ability to not only select the super company, but also the investment fund. You are able to compare different Australian super funds on sites like Finder, Canstar and Chant West.

Here are some of the key things you should look at when selecting a super fund:

  • Product Disclosure Statement (PDS)
  • Fees (management, admin, exit, indirect costs, advice)
  • Long-Term Performance
  • Insurance Options
  • Fund Type (e.g. Conservative, Aggressive, 1990’s LifeStage, 100% Australian Equities)

If you just let your employer set up your super account you’ll generally be put into a balanced fund, however, that’s not always the right option for someone in their 20s and 30s. It’s important that you consider your investment timeframe (it’s probably decades before you can access your super) and your risk tolerance, before selecting the right fund for you.

Keeping Track of Your Super

One of the biggest issues with a compulsory super system is that Australians lose track of all their different super accounts, created as they move between jobs and change their contact details. So much so that in 2018 the ATO announced that the total amount of lost and unclaimed super in Australia was around $17.5 billion. The good thing is that if you create a myGov account and link your ATO details, you’ll be able to keep track of your super funds and find any money that has slipped through the cracks.

How Much Super Do I Need?

The Association of Superannuation Funds of Australia’s (ASFA) Retirement Standard advises that to have a comfortable’ retirement, a single person will need $545,000 in retirement savings and couples will need $640,000. The ASFA Super Guru website provides a good breakdown of what a modest and comfortable retirement would look like. Plugin your details into their retirement tracker and find out if you’re on track to reaching your superannuation goals, and whether you need to make any adjustments.

Having a think about your super in your 20s and 30s will be something you’ll be glad you did when you reach retirement age.

Kate — HTM Editor & Host

Want to learn more about money and personal finance? Check out our article archive, the How To Money Podcast and the Australian Finance Podcast. Catch us on Twitter @HowToMoneyAUS and Instagram on @HowToMoneyAUS.

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