Life in your 20s tends to be pretty carefree at first. Then, responsibilities and expectations start to pour in and you’re left tending to immediate personal and financial matters.
It can be stressful! The thought of figuring out your retirement fund might be the last thing on your mind. That said, having a set plan for your method of retirement might be one of the best things you can do to establish some comfort at an early age.
We’re going to look at some tips for managing your super fund in this article, helping you think about your retirement fund in a more proactive way.
Let’s get started.
1. Ensure That You’re Being Paid
Australian employees that make more than $450 per month should receive semi-annual contributions to their super account.
That said, the responsibility is on the employer and some employers aren’t on top of that practice. They might even be avoiding it because of financial challenges. Whatever the situation, though, you’re entitled to the money.
Odds are that your employer is paying into your account, but it’s a good idea to make sure the money is coming in. You can contact your super fund or peek at your account through the government’s website.
If you find that your super isn’t being paid, you can either talk to your employer or request that the fund contacts your employer.
2. Be Selective with Your Fund
In a lot of cases, your company might funnel you into using a particular super account. You might even just take the first account they offer you because you’re not aware of the options.
It’s important to take a look at the various options you have for your super account, though. Different accounts give different opportunities for investment, interest rates, and more.
Depending on who you are, some options might make more sense than others. It’s tough to know just how you plan to use your money throughout the course of your career, though, so our next tip is an important one to follow through with as well.
3. Examine Your Account Every Few Years
Just because you’re in one particular superannuation account for a period of time doesn’t mean that you’re locked into it for the long haul.
Some accounts could have restrictions that keep you invested for a long period of time, while others might not. In some cases, you’ll experience a penalty for withdrawing your funds, but it still might be a good idea to explore your options. Different accounts also approach taxes in unique ways.
The best way to ensure that you have the freedom to bounce around is to look at the fine print right off the bat. If you feel like you might have different financial plans in a decade or two, find an account that lets you move.
These periods of time are also opportunities to think about changing your personal contributions. If it’s been a few years and you’ve stuck to a regular small contribution, think about increasing it a little bit.
You won’t be sorry that you set more money aside for retirement. If you can swing it, try putting a little more money into the account each month and see how it feels.
4. Find Scattered Accounts
If you’re a person who’s had a lot of different jobs, it might be a challenge to figure out where all of your super contributions have gone. Like taxes, rounding up all of that information is probably something that you want to put off.
It’s important to get it done, though, and the sooner you round all of your accounts up, the more interest that money can make. It’s best to take an afternoon, call your old employers, and see where all of your retirement account money is.
You can then incorporate it all into the same account and sleep a little easier.
5. Recognize Compound Interest
You can give extra contributions to your account at any time. This is an important fact to understand in your early 20s and 30s because that means you have a lot of time for those investments to grow.
A ten-dollar investment today could turn into thousands of dollars down the line. When you have 30 or 40 years for an investment option to grow, tiny contributions make a massive difference.
So, just because you don’t have much money to spare these days doesn’t mean that your contributions are insignificant. If anything, know that it’s unwise to avoid personal contributions until a later date.
It’s easy to think that you’ll make large contributions down the line, chipping away know will ensure that you have a solid sum to sit upon as you inch toward retirement.
6. Make a Contribution Plan
A smart way to add to your fund is to set aside additional money from each paycheck that goes toward your super.
This could be as little as $5 a week or as much as 20 per cent of your paycheck. Whatever you can swing will go a long way. $5 a week winds up to $260 a year, and that sum will grow a whole lot over the course of 40 years.
Your personal contribution plan doesn’t have to be set in stone. If one month is a little tighter than the last, you can forgo the payment. The important thing is to establish that contribution as a normal part of your budget and try your best to stick to it.
You might pay $15 a month for streaming services, so why not pitch the same amount into your retirement fund and set yourself up for a better future?
7. Identify Government Options
There are numerous ways that the government helps individuals contribute to their account. Do some digging and see if you’re eligible for any of those benefits.
For example, one superannuation tax offset offers $500 for low-income individuals in some cases. That might be as much as your yearly personal contribution, so it’s important to find those deals when you can and make the most of them.
If you’re struggling to find information about perks for people in your income bracket, you can take a look at the government website or even reach out to them to talk with someone who can help you out.
8. Study the Stock Market
Many supers give you the option to invest the money as you see fit. This requires that you have some idea of the stock market and how to play it to your advantage.
There’s no surefire way to win when you’re playing stocks, but there are some strategies you can use to grow your wealth. Generally speaking, long-term investments are the ones that people use to set themselves up for retirement.
The market changes, though, and you have to keep up with the times to manage your investments well. If you want to take some risks or just manage your own investments, studying the stock market is a great way to prepare for that.
9. Explore Insurance Options
When you’re just starting out, the idea of insurance might be another thing to roll your eyes at. You’re already struggling to make ends meet as it is, so why would you contribute to an insurance plan?
Contrary to popular belief, super insurance programs are very important at a young age. Because you don’t have a lot of other money to fall back on, your super might be the thing that keeps you afloat in the event of an emergency.
Insurance plans offer income protection, life insurance, disablement insurance, and more. Additionally, most of them take the premiums from your super balance so you’re not scrambling to come up with additional money to cover them.
Shop around with different insurance providers to see what works best for you, but note that it’s a very smart move to set yourself up with insurance for your super. You’ll be kicking yourself if something happens and you’re not covered.
10. Keep an Eye on Your Accounts
Our final tip for you is to make sure that you’re actively managing your super account.
You don’t have to look at it every single day by any means, but it’s important not to forget about it and assume that it’ll keep working all the way up to retirement. When everything is in order it’ll keep working, but human error and logistical complications can throw things out of order sometimes.
Your employer might make a clerical error, your account could have some kind of hold, or your investments might take a bad turn that you need to know about. Your investments should be safe and your employer will likely make regular contributions, but it’s on you to keep tabs on those things.
Check on your account from time to time to make sure that it’s all up to date. This is a precautionary measure that might not be necessary, but you’ll be thankful that you monitored the account if anything goes wrong.
Looking for a Halal Super Fund?
Hopefully, the information above has helped you think about your super in more practical terms. You might be wondering if there’s a super option that aligns with your beliefs, though.
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Talal currently serves as a Non-Executive Director on the Whitlam Institute and Western Sydney University Foundation Council Board. He also serves as Chairman of First Quay Capital and Chairman of the Australian Arab Dialogue. Talal has also served on the Australia Post, Board of Sydney Ports, Macquarie University and the Western Sydney Area Health Service and the Chairman of the Department of Foreign Affairs and Trade; Council of Australia Arab Relations. In an executive capacity, Talal spent 10 years at PwC as a director and strategist, and at investment firm Babcock & Brown in the Corporate Finance Group and later in the Technical Real Estate Division. Later Talal held leadership positions in Better Place Australia, Platinum Hearing and Star Transport Australia.