Superannuation and Young: How to Take Charge of Your Financial Future

For many young, superannuation is something their employers handle, a set-and-forget system that only becomes relevant decades down the track. But here’s the kicker, by ignoring their super in their 20s and 30s, young could be missing out on tens of thousands of dollars in retirement savings. The earlier you take charge of your super, the better positioned you’ll be for a financially secure future.

Studies show that Australians under 35 are the least engaged with their superannuation, often due to a lack of financial education and a perception that retirement is too far away to worry about. According to the Association of Superannuation Funds of Australia (ASFA), many young workers don’t even know which fund their employer contributes to, let alone how their savings are performing.

Super isn’t just about stashing away money for old age; it’s about building financial independence. Young who take control of their super early can set themselves up for financial freedom much sooner than they think. So, why does superannuation matter, and how can young start making smarter decisions today? Let’s break it down.

Why Superannuation Matters for Young

Superannuation is more than just a retirement fund, it’s an investment that grows over time, thanks to compound interest and employer contributions. Here’s why it’s crucial for young to start paying attention now:

• The Power of Compounding: Small contributions made in your 20s and 30s can turn into a substantial nest egg by the time you retire.
• Employer Contributions: Australian law requires employers to contribute 11% of your salary to your super, set to increase to 12% by 2025.
• Tax Advantages: Super contributions come with tax benefits that can reduce taxable income.
• Choice of Fund Matters: Some super funds have high fees and poor returns, which can significantly impact your long-term savings.
• Financial Security Beyond Retirement: Your super can help you prepare for unexpected life events like illness or job loss.

Example: The Impact of Starting Early

A 25-year-old who contributes an extra $20 per week to their super (on top of employer contributions) could end up with over $100,000 more in their fund by retirement, thanks to compound growth. Waiting until 40 to take super seriously means you’d need to contribute much more to achieve the same result.

Why Are Young Disengaged from Super?

Despite the clear benefits, many young remain disengaged with their superannuation. Here’s why:

1. Retirement Feels Too Far Away – It’s hard to prioritise super when there are more immediate financial concerns like rent, bills, and student loans.
2. Lack of Education – Schools don’t teach superannuation in depth, leaving many young clueless about how it works.
3. Complicated Fund Options – With dozens of super funds, investment choices, and fee structures, navigating super can feel overwhelming.
4. Multiple Accounts – Many young have multiple super accounts due to job changes, leading to higher fees and lower savings.
5. ‘She’ll Be Right’ Mentality – Many people assume their super will take care of itself, missing opportunities to optimise it early on.

How to Make Superannuation More Engaging for Young

To help young become more proactive about their super, the industry and government are exploring ways to make super more accessible and engaging.

1. Technology and Financial Apps

Apps like MyGov, Super Rewards, and specific super fund apps allow users to track their super balance, consolidate accounts, and even make extra contributions with just a few taps.

2. Simplifying Super Information

Super funds and financial institutions are investing in more user-friendly digital platforms that break down complex super concepts into easy-to-understand language.

3. Employer and Industry Initiatives

Some companies are introducing workplace super education sessions, helping employees understand how to make the most of their retirement savings.

4. Government Awareness Campaigns

The Australian government is working on initiatives to encourage early super engagement, including simplified fund comparison tools and reminders to consolidate multiple accounts.

Practical Strategies for Young to Take Control of Their Super

If you’re a young Aussie looking to boost your super, here are some practical steps to get started:

1. Check and Consolidate Your Super

• Log into MyGov and check where your employer is sending your super.
• If you have multiple super accounts, consolidate them into one to avoid paying unnecessary fees.

2. Choose the Right Fund

• Compare super funds using resources like the Australian Taxation Office (ATO) super comparison tool.
• Look for funds with low fees and strong long-term performance.
• Consider switching to a high-growth investment option if you have decades ahead before retirement.

3. Make Voluntary Contributions

• Adding even a small amount ($10-$20 per week) can significantly boost your balance over time.
• Some employers offer salary sacrifice options, reducing your taxable income while growing your super.

4. Understand Your Investment Options

• Most super funds offer investment choices like conservative, balanced, and high-growth portfolios.
• Younger with a longer investment horizon may benefit from higher-growth options, as they typically offer better returns over time.

5. Be Aware of Fees and Insurance

• Some super funds charge high administrative and investment fees, which can eat away at your savings.
• Many funds automatically include insurance policies (life, disability, income protection)—review these to ensure they align with your needs.

The Role of Employers and the Government in Superannuation Awareness

How Employers Can Help

Employers play a key role in improving superannuation engagement among young workers. Some strategies include:

• Providing superannuation education sessions for new employees.
• Offering salary sacrifice programs for voluntary super contributions.
• Helping employees consolidate super accounts by providing necessary resources.

Government Initiatives

The Australian government has been introducing policy reforms and educational programs to encourage super engagement, including:

• Raising the super guarantee (set to reach 12% by 2025).
• Super stapling, which ensures that employees keep the same super fund when switching jobs, reducing the risk of multiple accounts.
• Tools like Moneysmart, which provides independent financial guidance for managing their super.

Conclusion

Superannuation might not be the most exciting topic for young, but ignoring it could mean leaving hundreds of thousands of dollars on the table. The earlier young take charge of their super, the better their financial future will be.

By checking their super fund, consolidating accounts, making small voluntary contributions, and understanding investment options, young can ensure they’re maximising their retirement savings. With employers and the government also stepping up to boost awareness, now is the perfect time to start taking super seriously.

So, if you haven’t checked your super balance in a while—now’s the time to log in and take control of your financial future!