What I’d wish I’d known about superannuation

What I’d wish I’d known about superannuation

What I’d wish I’d known about superannuation

Superannuation sounds like a scary word to most people and often ends up on the bottom of the to do list. However, as you begin to Marie Kondo and Barefoot Investor your way into 2020, we urge you to get to know more about your super. Your future self will thank you.

You don’t have to be an expert when it comes to super, but here are the basics you should know below.

  1. Super is all about compound interest

Compound interest is key to wealth creation. Saving consistently over may years is a great strategy for building wealth as this compounding effectmeans you can earn interest on your previous interest. Your superannuation is agreat way to maximise forced savings.

  1. Super isn’t just for older people

The earlier you begin to put more into your super, the more compound interest becomes your friend. For example, a 25-year-old putting an extra $50 a month into super will have an extra $175,000 by age 65, whereas a 35-year-old who did the same would have an extra $79,000 and a 45-year-old $32,000.

  1. You don’t need millions to retire
Want to know exactly how much super you need to retire comfortably? Check out our previous blog here.
  1. All super funds are different

This means that it’s important to know the basics of how they are investing your money. If your fund was chosen by your employer, you may be in a default fund. You can switch funds if you are unhappy with your fund’s performance or fee structure.

  1. Don’t ignore the annual superannuation letter

Whilst it’s tempting to throw the letter in the bin, it’s important to take 5 minutes to read through it and assessfactors such as your life insurance cover. Do you know how much you will receive? Is it enough to cover your family needs? Most funds also have website and apps to allow you to check your fund in real time.

  1. Your superannuation is tax free when you retire

One of the bets benefits of your super income when you retire is that it is tax free. You can transfer up to 1.6 million into a super pension when you retire and both the income you receive and the earnings on your money are tax free.