You’re never too young to start thinking about super. In fact, the earlier you start the bigger the difference you will see at retirement.
Did you know that for a young person $1000 invested in a super account now will equal about $4000 in today’s dollars at retirement, thanks to the power of compound interest? Add $1000 every year and that will give your savings a real boost.
Yet many young people aren’t paying attention to their super.
Research by the Association of Superannuation Funds of Australia (ASFA) has found that Aussies aged under 30 tend to have more money in their super accounts than their bank balances but 40% have no idea what their super balance is and a further 16% have only a vague idea.
ASFA has these tips for young people about super:
• If you have a full-time, part-time or even casual job and you earn more than $450 in a calendar month, your employer is required to make super contributions to a fund on your behalf at the rate of 9.5% of your wages. If you are under 18, super contributions are only payable if you work more than 30 hours a week.
• If you are employed, check your payslip and your superannuation account transaction records to make sure you are getting the contributions you are legally entitled to. If you are not, the first thing you can do is take it up with your employer. The Australian Taxation Office (ATO) can also help you with information and advice on your super entitlements and recovering any contributions your employer has not paid.
• Multiple accounts can cost you dearly over time. Each account will typically have a fixed administration charge of at least $100 a year. The more accounts you have the more administration fees you will pay. As well, with each account there could be associated insurance cover, with a premium of $200 or more per account.
• While insurance coverage can be beneficial, you should check to see you have the cover you want or need, particularly if you have more than one account.
• Consolidating super is not hard. All you have to do is log into your MyGov account and go to the ATO section to view the super accounts you hold. Consolidating your savings into just one account is only a few clicks away once you have mastered your MyGov login.
ASFA is giving young people between 15 and 25 the chance to win $300 cash now or $1000 for their active superannuation account in a competition designed to get them thinking about the benefits of delayed gratification and increased long-term wealth via super.
You can find details on how to enter at superguru.com.au. Be quick, though, as entries close on Friday, April 14, at 5pm.