Getting the most out of super: five tips for your 20s
The absolute last thing on my mind is how my life will be when I'm 70.
Just like most people of my generation, I'm more concerned about the "here and now" - all the tangible things I can see in front of me.
That said, there comes a time, once a year, when I get a magical email that reminds me how important my retirement really is.
Once you put a dollar figure on it, it immediately becomes more relevant.
1. Find your lost super
It's important to nail the basics of superannuation when you're at the start of your working life.
It's like planting a seed alongside a wooden stake - it needs guidance to grow in the right direction. The first thing you should do is find out where your super is hiding.
If you're only just remembering that summer job you had at a burger bar when you were 15, you can easily find your forgotten super and roll it over into your existing fund using the tax office's SuperSeeker tool.
2. Cut back on fees
Next up is fees. How much do you pay each year in management or performance fees? Anything above 1% is too much, so if you're in that boat you should hop out as soon as you can.
Financial services regulator ASIC's MoneySmart website says a difference of 1% in returns can mean a 20% difference in 30 years.
According to the Association of Superannuation Funds of Australia (ASFA), the average balance for a 55- to 59-year-old's super is $170,393. Reduce that by 20% and you're saying goodbye to more than $34,000.
3. Pick the right fund
You should also make sure you're in a fund that suits your situation.
If you plonked your super into your employer's fund without research, it may be time to take a closer look.
Check a research site such as SuperSavvy or ?SelectingSuper - they can give you the lowdown on performance and show you exactly how your fund compares in the greater scheme of things.
And when you're analysing performance, make sure you consider the long term.
4. Pick the right investing strategy
You might be in a default MySuper fund that has low fees but is not producing the strongest returns.
Pick a period of between five and 10 years and see how its performance compares against other funds. If it's not hitting the mark, it might be time to jump ship.
But before you do, make sure you check the entry and exit fees.
Something else to check is how the portfolio of the default fund is invested.
You are probably in a balanced account. Unless you nominate otherwise, your super will automatically be put into a single-option MySuper fund.
If, like me, you feel you will have plenty of time later to play it safe, look for growth or high-growth options to give yourself a head start.
But before you change your investment strategy, find out about the switching fees and the yearly returns.
5. Check your insurance cover
MySuper usually also automatically signs you up for insurance, so if you think it's too early to be paying for life or total and permanent disability (TPD) insurance, contact your fund to opt out.
Super is your friend.
It doesn't really need too much work in its early stages - you can get away with giving it a health check once a year at statement time.
I know I will have to take it more seriously when I earn more but for now that works for me.