The sooner, the better: How to add six figures to your super

I still cringe thinking back to this missed financial opportunity. At university, I worked a handful of part-time and casual jobs. One day, one of my uncles suggested I start contributing to my superannuation.

As a low-income earner, I would have been eligible for the government co-contribution. If I made personal contributions, the government would co-contribute up to $500. Yep, the government would have literally paid me to contribute to my own super.

Want to really want to make financial progress in 2025? Start with your super, and soon.Credit: Simon Letch

Honestly, it was a pretty solid tip. What did I do with it? Absolutely nothing. At the time, I didn’t understand superannuation. It seemed like some complicated retirement thing I had to sign up for when I got a job. Wasn’t retirement decades away?

Plus, $500 in one year didn’t seem like much. It felt like a lot of effort to figure out my super for a few hundred bucks. I thought I was better off focusing on increasing my income.

Of course, now, over 10 years later, I know differently. In 10 years, that $500 super contribution would’ve grown to over $1000 at a 9 per cent average market return. And in the 40 years to retirement? It would’ve grown to $18,000.

I wish I’d known that ignoring your superannuation is essentially robbing yourself of (literally) hundreds of thousands of dollars over your lifetime.

The changes you make to your super in your 20s to 40s will have a far bigger impact than making those same changes in your 50s or 60s.

Why superannuation?

Superannuation is basically a system of “forced” investing for retirement. You contribute a portion of your earnings towards superannuation, and your selected super fund will invest this on your behalf, to grow that pool of funds for you to use in retirement.

If you’re lucky, you have about 40 good years in the workforce (from about 20 to 60). Of course, this can be disrupted by many things – health, family, carer responsibilities, etc.

This leaves up to three decades (from about 60-90) when you’ll still need money but won’t be earning actively. These decades can also have increased costs involved – healthcare issues, nursing or aged care facilities and services, etc.

So, if during the years you were actively working, you didn’t put money aside for retirement, what money would you rely on when you got there?

What most people don’t realise is – retirement is not an age. It’s a financial position. If you get to 60 or 65, and you can’t financially afford to retire, then you simply can’t.

This is the purpose of superannuation. Most people won’t think about retirement until it’s too late to start thinking about it. But with the government forcing you to squirrel away a small portion of your income as soon as you start working, you still stand a chance.

Sadly, it’s not that simple

Today, there are over 100 super funds in Australia. There are different kinds of funds: retail, industry, self-managed, corporate.

It also seems like every other year, there’s a new fund coming out with a different angle – women’s empowerment, ethical investing, tech investing and so on.

Each fund has different investing options, with different labels that don’t all mean the same thing. When you compare the asset allocation, the “aggressive” portfolio in one super fund may not be comparable to the “growth” portfolio of another super fund.

Trying to make sense of all the jargon, just to pick an appropriate portfolio for your goals and needs, with a good fund that won’t rip you off, can feel like a Herculean task.

But the alternative isn’t pretty. You can spend decades contributing to your super, thinking your retirement is taken care of, only to find out that the high-fees, wrong portfolio, underperforming fund cost you hundreds of thousands of dollars.

A checklist for sorting your super

Here’s a checklist of the most important actions to maximise your super. Any single item on this list could make a $100,000+ difference to your super over your lifetime.

• Find any “lost” super (there is more than $16 billion in lost/unclaimed super)
• Consolidate your super funds (if you have multiple funds)
• Select a good-performing fund with reasonable fees
• Select a portfolio and asset allocation that aligns with your risk profile
• Make contributions to take advantage of tax-saving opportunities
• Review and optimise any insurances you hold within your superannuation

The thing is – sorting your super is not something to leave until your 50s. You want to sort out your super as soon as you get employed. Why? Because super needs time to grow. The more time it has, the bigger it will grow.

The changes you make to your super in your 20s to 40s will have a far bigger impact than making those same changes in your 50s or 60s.

So, if you really want to make financial progress in 2025? Sort out your super. It’s one of the most impactful financial moves you can make.

Paridhi Jain is founder of SkilledSmart, which helps adults learn to manage, save and invest money through financial education courses and classes.

• 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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