“But the benefits of engaging with your super as a young professional are significant.”
Here are some tips for making the most of your super when you’re young.
Get to know your super
If you haven’t done so already, Power recommends finding out the name of your super fund, downloading your super fund’s app, logging in to your account and checking your super balance.
You can run a quick super check to make sure your personal details are correct, your employer has been paying your contributions, and who your nominated beneficiary is.
You will also be able to see how your super has performed in recent years, what insurance cover you have within super, how your money is being invested, and what fees you are paying.
“If your super is underperforming, it may be time to consider switching to a different fund,” Power says.
The ATO’s YourSuper Comparison Tool can help you compare different funds, and work out whether it might be worth moving to a fund that offers better performance, lower fees or both.
Consolidate your super
If you’ve had more than one job, you may have super fund accounts that you’ve lost track of. You can search for lost super through the ATO website.
If you do find you have more than one account, you might want to consolidate your super – in other words, roll it all into one.
“Having multiple accounts means you could be paying multiple sets of fees,” Power says. “Consolidating your super is one way to reduce unnecessary costs that could be impacting your super balance.”
However, in some circumstances, keeping more than one account might be worthwhile – for example, if you have insurance cover within a super account that you don’t want to lose.
Start contributing more to your super
Work out whether you can afford to put a bit more money into your super from your pay cheque, Power says. “You will be surprised how much a small additional contribution can make to your balance at retirement. A 25-year-old earning $60,000 a year could have $50,000 more for retirement by adding just $20 a week to their super.”
You can use a simple super calculator to estimate what effect extra contributions could have.
Chapman says making extra contributions through salary sacrificing can be a tax-effective strategy.
“Making before-tax – called ‘concessional’ – contributions to your super can not only boost your super savings, but, in many cases, it can reduce the amount of tax you pay,” Chapman says.
This is because concessional contributions are generally taxed at 15 per cent, which is probably lower than the marginal tax rate you would have paid on that money if you’d received it in your wages instead of putting it into super.
“For example, someone earning $85,000 a year could put in an extra $50 a fortnight,” Chapman says. “This could boost their super by $1105 [a year] but only reduce their take-home pay by $851.”
Get some advice
It’s never too early to get financial advice. You can see a financial adviser, talk to your accountant if you have one, or get advice from your super fund.
Many super funds offer free general advice about how to make contributions, and different investment options and insurance cover within super.
Beyond that, super funds are offering an increasing range of low-fee, tailored advice, Power says. “There are now affordable and accessible options for young professionals who may not require comprehensive ongoing advice.”
CFS members, for example, can pay $88 a year to access personalised digital advice via Otivo, or get one-off, topic-based advice from a Viridian Advisory financial adviser from $500.
You can also educate yourself about super via your super website, or resources such as Moneysmart. It can be time well spent. Those retirement village aqua aerobics classes are going to come around a lot quicker than you think.
To learn more, visit cfs.com.au/
