On this page
- 1. Check your employer’s SG contributions
- 2. Decide if your super fund is right for you
- 3. Consider extra contributions
- 4. Find any lost super
- 5. Consider combining your accounts
- 6. Set up online access to your account
- 7. Take advantage of free government money
- 8. Review your insurance cover
- 9. Evaluate your investment option
- 10. Check out the First Home Super Saver Scheme (FHSSS)
When you’re in your 20s, retirement can seem a long way off, but that presents an opportunity not to be wasted.
Paying a little bit of attention to your super now can have a big payoff in the future, as it means you get to enjoy the benefits of compounding interest on your savings.
To help point you in the right direction, here is a list of useful tips and strategies to consider in your 20s. Not every tip will suit everyone, but the list is designed to help you take control of your financial future.
1. Check your employer’s SG contributions
Ensure your employer is paying Superannuation Guarantee (SG) contributions regularly into your super account. Once you turn 18 your employer is required to make SG contributions on your behalf regardless of how many hours you work for them or how much you’re paid.
If you meet the eligibility conditions, SG contributions are payable whether you work full time, part time or as a casual and if you are a temporary resident. Contractors who are paid ‘wholly or principally for labour’ may also be considered an employee for super purposes and be entitled to receive SG contributions.
Your employer must make SG contributions on your behalf at least quarterly, but some employers can be slow to make their compulsory contributions and some don’t make them at all – particularly if the business is in financial difficulties.
Check with your super fund (or the ATO’s online services through your myGov account) that your contributions are being paid regularly. If not, ask your super fund to follow up with your employer, or consider reporting your employer to the ATO.
If you plan to make extra voluntary super contributions before 30 June to claim a tax deduction, ensure all your employer’s contributions (including salary-sacrifice payments) are up to date, so you don’t accidently go over your annual super contribution cap.
2. Decide if your super fund is right for you
At this stage of life, you’re probably in your current super fund due to your employment arrangements – not because you actively selected it. As you are likely to be with your super fund for many years, it makes sense to check whether it’s the right one for you.
Consider features like what investment options it offers and how satisfied you are with the communications you receive.
Compare your fund with similar super funds in terms of the fees you are paying, how your fund has performed over the past five years and whether you can get answers and quick service if you need help.
It makes sense to reassess your super fund every 12 to 18 months to ensure it still suits your needs.
3. Consider extra contributions
When you start out in your 20s, your budget is usually pretty tight and there are lots of other demands on your salary or wage, but if you can spare a few dollars from your pay packet it can make a big difference later on.
If you make extra small contributions into your super account now, they will have many years to grow and to benefit from compounding (or earning interest on your interest). This can really boost your retirement savings.
4. Find any lost super
If you’ve had part-time or casual jobs in the past, make sure you know where all the super contributions made by your different employers have gone.
You can find and manage your super using the ATO’s online services through your myGov account. By linking the ATO to your myGov account, you can see details of all your super accounts (including any you may have forgotten about) and any of your super held by the ATO because it couldn’t be paid into an account.
5. Consider combining your accounts
When you’re in your 20s, it’s easy to end up with multiple super accounts courtesy of having several full-time or part-time jobs. So think about bringing them all together into one super fund to avoid paying fees on each super account.
Tools in your myGov account make it easy to transfer (or rollover) money you have in multiple super accounts into a single super account of your choice.
6. Set up online access to your account
With online access, you can check in with your super fund at any time. It also means you don’t have to wait for the yearly or six-monthly statement from your super fund to see how your savings are growing.
You can also find out how your super fund is investing your money and take advantage of useful tools and educational material.
7. Take advantage of free government money
Depending on your income, you could be eligible for a government co-contribution into your super account of up to $500 a year when you make personal (after-tax) contributions.
There is more free money on offer if you are eligible for the Low Income Superannuation Tax Offset (LISTO), which was previously called the Low Income Superannuation Contribution. If you’re eligible and earn up to $37,000, this is a payment of up to $500 from the federal government directly into your super account.
8. Review your insurance cover
Most super funds offer their members insurance cover for death, total and permanent disability (TPD) and income protection, with the premiums paid from money in their super account. Although this can be a cheaper way to get insurance cover, it may not match the level of protection you need – either too much or too little.
It’s important to review your insurance cover to see whether your current type and level of cover is right for you – particularly as your circumstances change. A new partner, new baby or new mortgage could mean you need more insurance protection to pay your bills if anything happens to you.
9. Evaluate your investment option
Many people in their 20s are in their super fund’s MySuper or default investment option, but this may not be the most appropriate one for your particular circumstances. Super is a long-term investment, so you may be willing to take on a little more risk with a growth investment option (which has a higher percentage of shares), knowing you have a long time to ride out the ups and downs of investment markets.
Some MySuper funds use a lifecycle strategy, which automatically increases the amount of defensive assets (such as cash and bonds) versus growth assets (such as shares) as fund members age.
Consider how your investment option – especially the MySuper one if you have not made an investment choice – is invested and how it has performed against similar investment options in other super funds.
10. Check out the First Home Super Saver Scheme (FHSSS)
The FHSSS is a government initiative that lets you save for your first home using the lower tax environment within the super system. With a lower tax rate on the earnings associated with your FHSSS savings, for some people it may be a good alternative to keeping your savings in a bank account. It may even help you fast-track your deposit and get into your first property earlier.
There are strict rules governing the FHSSS, so make sure you understand them before using the scheme.
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