Goodbye student life and hello work life. If you’re one of the thousands of high school, TAFE and uni students about to start your first job, here are four tips to help you understand your superannuation.
1. Super is important – it’s your money for the future
In a nutshell, super is money set aside for your retirement. You contribute throughout your working life to have the funds to enjoy later on.
You can’t normally dip into your super savings while you’re in the workforce, but it’s still your money. So it’s worth keeping tabs on your super throughout your career and taking control of your retirement planning to help you enjoy a better lifestyle.
2. You can choose your own super fund
Most of us are free to choose our preferred super fund though there are exceptions. These include workers covered by certain awards or workplace agreements, and some public servants. Your employer will let you know if you fall into one of these categories.
When you start work, your employer is obliged to give you a standard choice form. This lets you nominate the fund you’d like your super contributions paid into. If you don’t provide details of your preferred fund, your employer will select a fund for you.
Along with your employer contributions, you can add to your super through contributions of your own if you choose.
3. Watch for fund fees
With hundreds of superannuation funds to choose from, it can be hard knowing which one is right for you. One factor that may narrow the choice is fund fees.
Australians pay on average around $1300 a year in super fund fees annually according to research by Grattan (April 2014), which can add up substantially over time. In fact, Grattan also calculated that a 30 year old paying super fees until retirement could possibly be reducing their super balance by $250,000.
With this sort of money at stake, it’s worth checking the fees that apply to any fund you’re considering.
4. Keep track of your investments
One of the best ways to track the returns on your nest egg is by checking out your annual super statement. This shows the earnings as well as any fees and other information about your super account. By reviewing your statements you’ll get a clearer idea of how your super is shaping up. Many funds provide online account access, or allow you access to your balance through your mobile app, and that’s even better.
All investments come with risk, and you need to decide the level of risk that you are comfortable with. If you’re not sure what to look out for, consider speaking to a financial advisor for advice on making investments which are right for you. Taking interest in your super sooner rather than later can give you a head start in building your future wealth, and pave the way for greater financial wellbeing in retirement.
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