Gen Z workers: A few minutes now could save you thousands for retirement

If you’re a Gen Z worker, it might be tricky to get enthused by your superannuation balance at first glance.

It makes sense – employees in this age group have only had a handful of years in the workforce and there hasn’t been much time to build up savings.

If you’re just starting out in the workplace, it might be tricky to get enthused by your super. Credit: Aresna Villanueva

Data from the Australian Taxation Office shows that, as of June 2022, the median super balance for men aged 18-24 was $4617, while for women it was $4275.

But the experts say while you might be starting small, it’s important to focus on how time is on your side. Savers in this age group have around 40 years to build their nest eggs – and, at the same time, many of the actions you can take to check your funds are on the right track take just minutes.

Check funds are flowing

The first thing all super savers in this age group should check is whether their superannuation is actually being paid, says chief executive of the Association of Superannuation Funds of Australia (ASFA) Mary Delahunty.

Look at your payslip to see your super payments, and where they are being sent, then log in to your superannuation account to ensure the payments are landing.

“You should be able to determine if you’re missing any payments depending on what you have earned,” Delahunty says.

It’s worth checking that your funds are flowing in regularly when you start a new role, says director and financial adviser at Pursue Wealth, Sam Robinson.

“When first establishing a super fund or starting with a new employer it is best to check this regularly for the first few pay cycles to ensure the correct frequency of your contributions - some [funds] will have push notifications each time you receive a contribution.”

If you notice any gaps, you’re entitled to raise this with your employer. If you don’t have any luck resolving payments, you can report unpaid super to the ATO to investigate this on your behalf.

Get acquainted with the basics

Once you’re satisfied that your contributions are flowing, it’s time to get familiar with the basics of how your fund works so you can start building a connection to your money.

This step doesn’t require a finance degree or months of research. Most of the information you’ll need for this step can come from a quick call or live chat message to your fund.

Parc Wealth Management’s head of operations Michelle Bryant says one of the best things Gen Z savers can do is check that they don’t have multiple super accounts floating around.

“Consolidating into one account is a good way to make sure you’re not paying more fees than you should,” she says. You can view details of your super accounts via ATO online services and also search for any lost or unclaimed super.

Now’s also the time to check what insurances you are paying in your fund, Bryant says, and what fees you’re paying each year.

There have never been more options for how to invest your superannuation, so it’s also worth taking a look at where your funds are being placed.

Delahunty says that many young Australians are turning to social media, their family or friends for information about super. However, the best way to find out how your money is being invested and how much you’re paying in fees is to ask your superannuation provider directly.

“The information they can trust is from their fund.”

Weigh up extra contributions

Australian employers are required by law to pay 11.5 per cent of eligible employees’ salary into superannuation, but you also have the power to top this up.

You can boost your funds either by asking your employer to “salary sacrifice” an additional slice of your pre-tax pay into your fund, or you can make voluntary payments directly yourself.

Delahunty says it’s worth thinking about salary sacrifice early in your working life. This approach can deliver big returns, and you might not notice the impact on your take-home pay as much if you start while you’re young.

“If you can do that and forget about it, the significant difference that can make to your travel and life after work is enormous, if you do it when you’re young,” she says.

Bryant notes that before younger workers add more to their super, they should consider their other financial goals.

“The most important thing to understand is that this money will be inaccessible for a really, really long time – and are they comfortable with this?” she says.

Read up on First Home Super Saver

Homeownership may feel light years away for many young workers, but the experts say it’s worth at least getting a handle on how Australia’s “first home super saver scheme” works.

The policy, which lets you make voluntary super contributions to help you buy your first home, has specific rules and eligibility requirements that you need to consider.

“If you are a first home buyer and are certain you want to allocate your savings towards your first home, start considering this option for purchases within three to five years of your intended purchase date,” says Robinson.

You can find eligibility details for the program on the ATO website.

This is the second part of our six-week Gen Super series, which takes an in-depth look at what to do with your superannuation at each age, from Gen Alphas just starting in their first jobs to Baby Boomers, who are just starting to retire – and beyond.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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This story was created in partnership with Colonial First State. The content is independent of any influence by the commercial partner.