Superannuation. Retirement fund. Grey hairs. Adult nappies. Have I lost you yet? When we think about our Superannuation, without even realising it, our lizard brain says, “pfft but I’m only 30, let’s worry about today’s issues and not what’s going to happen in another 30 years”. Guys! This is a problem! I get it, reading any material related to your Superannuation and what you’re supposed to be doing to manage it correctly is straight up *yawn* boring.
After my recent dash to the hospital and the health insurance debacle that ensued, I also learnt a lot about my life insurance AND my Superannuation. Turns out I was pretty bad at this one too. Sorry guys, I’ve been selling you a lie. It turns out I don’t have my financial sh*t together after all! Never fear. Fearless Female Traders is putting on its financial cape once again and diving head first into Super-land, searching for all the good, bad and sexy surprises. And I’m not going to lie it’s a jungle out there!
Your Superannuation journey is – you guessed it – very personal to you, so these surprises may not all be applicable to you and your situation. I’m looking at you mum – I know you hang on my every word (jokes), but your Superannuation and its risk profile will be very different to mine because well, you’re retiring soon (she’ll hate me saying that)! Like many financial moments, the approach you take will depend on where you are on life’s crazy rollercoaster and the goals you have set for yourself. Make sure to keep this in mind when you do your own deep dive in the next 3 minutes.
Superannuation is a pretty sexy beast. She is essentially a Managed Fund who invests your money into a portfolio of different asset classes such as shares, property and cash on your behalf. Your employer contributes 9.5% of your taxable income and when you’re 60, she’ll either give it back to you in one big lump sum, or will send it in sweet, delicious installments. Kinda like you’re still getting a salary each month. See, she’s smart AND sexy!
Hoarding Super accounts like bad boyfriend’s is a dangerous game. Every Superannuation Fund has its own set of fees, relating to administration, investing and insurance. If you have multiple accounts, this means you’re paying these fees multiple times over. And for those accounts you no longer contribute to, these fees are just eating away at any available Super you have left.
Rolling your Super accounts into the one of your choice is no mean feat either. My husband was able to do this with one click on the MyGov website. I was not so lucky. And if you are having mild mid-life amnesia and aren’t sure when or how you signed up to older Super accounts, check out this link for any lost super.
Choosing a Super Fund is tricky. The official FFT investigation found most millennials will ‘just’ go with the Super Fund their employer recommends. For some industries this may be one of those *hand-diamond-from-tv-ad-thingy*, and if you’re like me and had 8,352 bar jobs during uni this could add up to quite a few.
If you don’t give two hoots, good for you. Go with your employer’s recommendation. Easy! If I have tipped your interest and you’re keen to do some more investigating of your own, the Canstar website lists the top performing Super Funds of 2018. It was this website that shocked the hubs into changing from BT Super to HOST Plus. I’ll leave the comparing up to you.
Get in and around your Super Fund, like the gorgeous thing she is. Not only does your Super Fund include group insurance that may provide financial protection from Total and Permanent Disability, to Life Insurance and Income Protection, your Super Fund is also a bloody gem at only charging your contributions at 15%. Outside of this, your income tax rate could be as high as 45% plus the Medicare Levy. I mean it’s a no-brainer!
Whilst all of these goodies above are great poster-gals for being a Super advocate, there are also many ways your Super can come out under-cooked. Some of the things to watch out for (in my opinion. Yes, mine) include –
- Find out how much you ACTUALLY have in Super. Do you know?
- Understand what investment option your Super Fund is following. If you haven’t picked one, it defaults to a ‘MySuper’ option which is generic, cost-effective, low-risk etc. Review it, understand it and if you think it’s necessary, change it! For example, my Super fund is in a mid-tier risk option, whereas my mum, who is closer to retirement, has chosen a lower risk option.
- Understand your fees and know what you’re paying. This may seem obvious but many, many, many people have no clue what percentage of their Super is eaten up by fees. Depending on your structure, you may be able to reduce them. Read the stuff they send you in the mail!
- Are you doubling up on Life insurances like my husband was? Read: “How much is enough insurance?”
Even though our employer’s are obligated by law to contribute part of our earnings to a Superannuation Fund, don’t discount this as another ‘obligation’ you don’t care to know about. The incredible outcome of Super is a fat nest egg to live off when you retire – forced savings and unlike many other countries, this is one thing we should be thanking the Government for.
As always, your Super shouldn’t be the only investment you rely on for the future, so I will keep nurturing my much smaller nest egg in Shares and continue paying off my larger, less liquid nest egg – my house.
What are you doing to build your future nest egg?
Fearless Female Traders