As an employee, Super is something we all have.
In fact, these days we have well over 10%* of our income directed into this long-term savings pool.
*The minimum from 1 July 2023 is 11%.
This is scheduled to progressively increase to 12% on 1 July 2025.
Check with the ATO.Unless your retirement is coming soon, we can dismiss our Super as something to think about later. However, there are big benefits that come from paying attention now.
This has two parts:
Part (a) is the money your employer pays in. Your employer is required by law to transfer your Super contributions in 4 times per year. These payments are due by the end of October, January, April, and July.
Some employers pay in monthly just to keep on top of it, but 4 times a year is the minimum. Set yourself a reminder in your calendar to log in, or phone your Super fund, to check that these contributions have been received. If it hasn’t arrived, then talk to your pay office or boss. This is your money and you’re entitled to receive it.
Part (b) is the amount you pay in by choice. If you’re waiting until you have a big lump sum to dump into Super, then DON’T. Instead, try using ‘Little and Often’ as your strategy. Small amounts can make a huge difference over time. A 25-year-old who adds $50 extra each week will have $222,500 more at Retirement age. Talk to your Super fund about how you can get started today – they can tell you how much extra you can put in, and how to make it happen.
Super is a great investment environment with significant tax advantages. However, it isn’t the only option you have available to plan for your retirement. You may decide to invest additional funds outside of Super which would allow early access and potentially early retirement. With that said, many commentators suggest taking full advantage of the available Super Contributions caps before looking outside. Like all things, it’s a trade-off to be discussed and considered.
Choosing your investments wisely is a key factor in boosting your Super. Most Super funds have a good range of options available. But how do you choose? Contact your Super fund and they’ll point you in the right direction either through advice or online tools. Everyone is different and you need to understand the options and choose what is right for you. Keep in mind that we all need some growth investments (shares and property), otherwise inflation will eat away at the real value of what your money can buy.
Your Super fund web site and your annual Super statement give plenty of information on the fees you are paying. It’s easy to compare online and find out whether the fees for your fund are lower or higher. Personal insurance is another area to watch. Make sure you know how much you’re paying and what you’re covered for. Insurance is important and if something goes wrong, you’ll want to be covered. But check it out by talking with your Super fund – you want Goldilocks cover – not too little, not too much, but just right for you.
Check out how your Super is growing over time. You don’t need to look at it every week, or month, in fact you’ll start to worry too much. But you should have a look at least each year, or after a major share market fall. You can take the latest balance and plug it into the online investment calculator provided by your Super fund. You’ll see what your money can grow to when you retire. The idea is to learn and adjust, not overreact, or panic. If the recent volatility has got you nervous, remember that you’re investing for the long-term. To avoid switching to cash when markets are bumpy (and missing out on future growth), choose an option that you can stick with over time. Chopping and changing your investment choice in Super is not a recipe for success.
Super may seem confusing, and sometimes a bit scary, but your Super fund is there to help you grow your nest egg for retirement. Just like achieving success in all areas of personal finance, your Super will always do better over time when you give it a little more attention.
Winning with Money is all about paying attention.
