Because we all have 15 minutes…
I completely get it. You’re busy, you’ve got too much on, you’re tired. You’ll sort it out later.
We all have things we put off but if you live in Australia, chances are that there is one thing you LOVE to put off until later. It’s so boring that before I say the word, I want you to associate this word 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…Super (remember: think Superhero). For non-Australian readers, Super is the modern Australian equivalent of a retirement fund or what you’ll have saved in the bank when you choose to stop working.
And I completely get why we put off dealing with Super. It’s full title – Superannuation – makes even me go to sleep. Hence why when I say Super, I want you to think Superhero. I’ve even capitalised the word Super for this article to highlight its importance.
Super is more of a Superhero in our lives than its name suggests.
Super is an investment in your future self. It’s the fund you have to buy things with when you don’t want to, can’t or don’t need to get up and slog it out in the office every day.
So how does it work?
If you’re an employed in Australia and are earning at least $450 a month (as at July 2019), Super should be automatically paid 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.
Why you should keep reading: 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 lose it or get non-competitive returns.
Super is like exercise: you may hate the first step but you’ll feel much better about it once you take action.
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 which tells your employer where they should pay your Super. However, it can take effort to fill this out and it’s far too easy to just tick the box and go with your employer’s default super fund.
The problem with just ticking that box is that if you accumulate jobs throughout your career, you will develop a collection of super accounts. And not the appealing kind of collection like an assortment of posh handbags or sneakers. A collection of Super funds come with fees attached to every fund, which add 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.
And these fees can really add up. If you have multiple Super accounts, all being charged duplicate fees, these fees act like piranhas, all taking chunks out of your money.
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 all of the Super accounts you’ve ever had, including any lost super accounts which get reported to the ATO if you’re not actively contributing to your super or if your old super company doesn’t get your updated address when you move.
You’ve just saved yourself falling victim to piranha 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 your Superhero who will take you into a brave new world that you can’t see yet. That’s right: it’s time to pick your Super fund.
If you’re feeling overwhelmed, you are not alone. There are loads of accounts 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 frankly is a mouth full 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 you don’t have 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, do go back and read the product disclosure statement. Take 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 fuelled retirement.
And with that, you’re done!
Now that you’ve accomplished 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.