Why Young People Should Care About Super

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Forty percent (40%!!) of young people have no idea what their super balance is and a further 16% only have a ‘vague idea’, according to ASFA. This is concerning when you consider that for many of us, what’s in our super is probably a lot more than what’s in our bank account!

So 56% of young Australians don’t know what they’ve got in super.  Righto.   Let’s solve that riddle right now: according to the Association of Superannuation Funds of Australia (ASFA), the average super balance for those aged 20 to 24 was around $5,000, whilst the average 25-29-year-old has $16,000.1

Only 10% of us are checking our super balance regularly2, which is CRAZY when you consider it is likely to be one the biggest investments we’ll ever have.

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Super rules to be aware of

If you are employed, you should check your payslip and your super account transaction records to make sure you are getting the contributions you are legally entitled to.  If 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 earnings.  If you aren’t getting what you think you are owed, speak to your employer.

The Australian Taxation Office can also help you with information and in recovering any unpaid contributions, with non-payment of super affecting about 690,000 Australians annually.

If you’re under 18, contributions are only payable if you work more than 30 hours a week.

How much will we need?

The research released by ASFA in March this year also highlights that most us under age 29 strongly support super as a good way to save for retirement, even though we underestimate how much we’ll need to retire comfortably.

On average, we young people expect we’ll need $625,000 to retire, while those aged 60 and over expect they’ll need a much bigger sum of around $1 million. Unsure?  Use an online calculators to give you a rough idea.

 

So, what is the difference between a ‘comfortable’ retirement and a ‘modest’ one?ost (per year)

The BIG problem

More than 60% of young Australians have multiple super accounts. This is a huge problem when you consider that each super account comes with its own administrative and management fees.  So, if you have more than one account, you are getting slapped with extra fees. Don’t erode your super savings by paying duplicate fees!

Consolidating super accounts is not hard.  Log into your MyGov account and go to the ATO section to view the superannuation accounts you hold. Consolidating your super into just one account is only a few clicks away once you have mastered your MyGov login.

Where to go for help

As you may be aware, super contribution rules and limits changed on 1 July 2017.   While you mightn’t be able to put as much money into super due to these changes, the good news is there are still opportunities you can take advantage of.

If you are part of the 30% of young people who report trouble in finding their old accounts, don’t be afraid to ask for help.  Fortress can help you search for lost super and consolidate your superannuation accounts to ensure you are not paying multiple fees.  Make an appointment with us to organise your super, or head to the ATO’s website for more information.

While retirement might be 40 years away, now is the time to work out how much money you’ll need to fund the lifestyle you want, and how much super you’ll need to get there.

 

Written by Emma Linton Doig, Practice Manager at Fortress Financial Solutions

 

1-2, 4-6, http://www.superguru.com.au/grow-your-super/youngpeople

https://www.superannuation.asn.au/media/media-releases/2017/media-release-22-march-2017

Fortress Financial Solutions founder Chris Black is an award-winning financial planner based in Toowoomba who specialises in superannuation, investing, business succession, cash flow management, retirement planning and personal insurances (including life insurance, income protection, total permanent disability and trauma insurance).

Information on this site may be regarded as general advice. That is, your personal objectives, needs or financial situations were not taken into account when preparing this information. Accordingly, you should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs before acting on it. Where the information relates to a particular financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product.

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