As kids enter adulthood, retirement is the last thing on their minds. Understandably, sorting out their super falls to the bottom of their to do list even though neglecting it when young may lead to lost accounts, multiple sets of fees, missed employer contributions and less money for retirement.
Young adults are more likely to sort out their super if they get help from someone who matters in their lives – their parents.
Teaching your kids about finances is just as important as other life skills like driving and preparing for a job interview. As your retirement approaches and the value of super is fresh in your mind, it makes sense to have a quick chat to your kids about sorting out their super.
Here are a few tips you can use to kick start a super conversation with your adult children.
Tip 1: Bust those big super myths! Make it clear:
- Super is real money that belongs to you – employers must pay 9.5% of your salary into your super fund.
- You control your super – not your employer, not the government – if you don’t take responsibility for it, no one else will.
Tip 2: Make sure their employer is contributing to their super fund
Many Australians lose thousands to unpaid super each year. To help prevent this from happening to your kids, suggest they check their super statements to ensure their employer is making payments at least once a quarter.
To help keep track of contributions, selecting a super account likeEssential Super, which you can see online and in CommBank’s mobile app, makes it easy to see if employer contributions are being made.
Tip 3: Have them take their super from job-to-job
Rather than opening a new super account with every new job, your kids may benefit from keeping one account for life. Maintaining one account can help save fees and avoid the chances of losing super.
If your son or daughter has worked for multiple employers, suggest they use the government’s SuperSeeker tool to find lost super accounts.
Tip 4: Consolidate super – keep it all in one place
Multiple superfunds mean multiple account-keeping fees. Make sure your kids aren’t paying more fees than they need to by suggesting they consolidate their super into a single account. Super can be rolled over into a single account using MyGov or our Super Sorter tool.
In addition, you should suggest that they compare the costs, risks and benefits of their various funds. It’s also a good idea that they consider things like fees, loss of insurance cover and any costs for withdrawing from their other super funds as well as any investment or tax implications.
Tip 5: Take advantage of the included insurance
Getting insurance through super is an easy and cost effective way to get cover. Many super accounts come with default insurance, which is especially useful for young people who can sometimes feel more invincible than they really are.
Rather than taking out extra insurance, let your kids know that MySuper accounts such as Essential Super come with automatic Death and Total and Permanent Disablement (TPD) insurance. However, since all funds are different, your kids should reference a fund’s Product Disclosure Statement to learn about the terms and conditions for insurance cover.
Help your kids get closer to their super by starting the conversation today.