We all have things we like to put off, but if you live in Australia, chances are there is one thing you really love avoiding.
It’s undoubtedly a boring topic, but before I say the word, I want you to associate this yet-to-be-revealed topic with superwoman, superman or really any superhero in a cape who can pull off a million-dollar movie franchise.
Ready for it?
That one thing Australians LOVE to put off is… superannuation. Like I said, not a glam topic.
For non-Australian readers, super is the Australian equivalent of a retirement fund or what you’ll have saved in the bank when you choose to stop working.
And I get why we all put off dealing with super. I completely get it. You’re busy. You’ve got too much on. You’re tired. You’ll sort it out later. The dog needs walking. The list goes on.
Side note… the Mamamia team confess how much debt we have. Post continues after video.
However, super is more of a superhero in our lives than its name suggests.
Why? It’s an investment in your future self. It’s the fund you have to buy things with when you no longer want to – or can’t – get up and slog it out in the office every day.
So how does it work?
If you’re employed in Australia and earning at least $450 a month (as of July 2019), super should be automatically paid to you by your employer as a percentage of your current salary. And while you can’t touch this money until you’re ready to retire, it will continue to grow over time through compound interest.
If you don’t take care of your super, it’s very easy for your hard-earned money to be stripped away by fees, to get lost or get non-competitive returns.
So let’s take 15 minutes now to sort out your super in 3 steps:
1. Find your super
When you start a new job, your employer should hand you a form to complete which tells them where they should pay your super. However, it can take effort to fill this out and it’s far too easy to just go with your employer’s default super fund.
The problem with ticking this box for convenience’s sake is that when you change jobs throughout your career, you will develop a collection of super accounts. And as super funds come with fees attached, having more than one super can be a pricy and unnecessary expense that adds up over time.
You don’t even see most of these fees as the super funds take them out automatically, so you’ll need to read your annual statements to see them. Which, let’s be honest, very few of us actually do.
It will take you less than 5 minutes to fix this in front of your laptop:
- Head to myGov, the Australian government online portal which links your government online services.
- Ensure that you’ve activated the ATO services in your myGov account.
- Once active, look at the super section of the ATO services.
- Here you can see a list of all the super accounts you’ve ever had, including any lost accounts which get reported to the ATO if you’re not actively contributing to them.
- Ask the super fund that handles the majority of your retirement savings to follow up on these smaller accounts and give them permission to have the funds transferred.
You’ve just saved yourself falling victim to fees and have put your future-self first. Feels pretty good, right?
2. Find the best super fund
Now that your super is all in the one place, it’s time to pick a fund that will take you into a brave new world that you can’t see yet. That’s right: it’s time to pick the super fund that will work for you.
If you’re feeling overwhelmed, you are not alone. There are loads of funds to choose from and you might be feeling stuck.
At first glance, you’re staring at a bunch of products, all of which look relatively the same and none of which look like what you really want right now, which quite frankly is a bar (or two) of chocolate and to never have to read a product disclosure statement.
Really, there are just two key things you need to look at:
- Fees charged over time
- Returns on average (past performance)
Many comparison websites compare super funds for you and you’ll notice that they state that past performance is no indicator of future performance. Which basically means no one has a crystal ball and can’t predict what your super fund will do in the future.
You can, however, check in on your super regularly and ensure it is still working for you and its returns are still competitive. This will also need to be adjusted according to how much time you have before you retire.
While young people have enough time before retirement to go for gold with growth funds, the closer you are to retirement may mean a switch to a more conservative fund as you’re less comfortable with losing money that you will need soon.
When you’ve got more time, go back and read the product disclosure statement. Eat a whole bar of chocolate if it gets you past page 2.
3. Consolidate your super
After undertaking step 1 to find your super and then accomplishing step 2 to find the best place to put it, you’re now a skip away from step 3: Put it all in one place.
The reason for doing this is similar to step 1: You need to make sure as much as of your super money as possible is flowing to your retirement so that you can retire in cashmere rather than acrylic.
Step 3 is the simplest step to complete. Most super accounts will have a feature or form that enables you to consolidate your super funds. My own super fund has a dedicated section for consolidating super and it took just one form and involved zero effort from me, but has put me on a better course for a cashmere-filled retirement.
And with that, you’re done!
Now that you’ve conquered your super, you have my full permission to pour a glass of wine or whatever you prefer and congratulate yourself on a job well done. Most people don’t take action on their super so you’re already ahead of the game.
This post originally appeared on Money Bites and was republished here will full permission. The feature image used is a stock photo.
Kate Crowhurst is a financial literacy educator. With a background in specialist financial literacy research and education, she’s on a mission to deconstruct traditional finance education and make money bites sized. In 2018 she was awarded a place on Forbes 30 under 30 for her work in this field.