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Super tips for your 20s

Super tips for your 20s

It's never too early to think about the lifestyle you want when you retire.

Even when retirement is a way off, putting some work into your super now may save you time and earn you money over the next few decades. 

Tip 1: Consolidate your accounts

In your teen years it’s likely you worked a couple of different jobs and didn’t pay too much attention to your super. If you have multiple super accounts now, consider bringing them all together into one so you avoid paying multiple sets of fees.

Tip 2: Make sure your super fund is right for you

Your super isn’t something you should set and forget. Look into how your current super fund is performing. Are you satisfied with it? When comparing with other super funds look at:

  • Fees – Is what you’re paying in line with other super funds?
  • Investment options – You can choose from a range of investment types such as shares (higher risk) and cash (lower risk). Is your current fund providing the options you want?
  • Performance – How has your fund performed over the past five years compared with others?
  • Service – Are you able to get the answers you want when you need them?

Moving forward things might change, so re-assess every 12 months to ensure you’re on the right track.

Tip 3: Take advantage of government initiatives

Depending on your income, you may be eligible for up to $500 a year in government co-contributions when you make personal (after-tax) contributions to your super fund. See more about government co-contributions.

By law your employer is generally required to put 9.5% of your salary into your super account. If you choose to make extra pre-tax super contributions (for example salary sacrifice contributions) you may save tax.

Pre-tax contributions into your super are, for most people, taxed at a rate of 15%, which may be less than your marginal tax rate.

See more information from the Australian Government on contribution caps and thresholds.

Tip 4: Look at insurance options

Most super funds offer death cover, total and permanent disability cover and income protection for their members, paid out of the money in their super account.

Getting insurance through your super can be a cost effective way to get coverage if you think this is something you need.

It’s important to read through the product disclosure statement closely so you know exactly what you’re getting as coverage through your super may be limited, slower to pay and end earlier than other insurance providers.

 

Remember, before you make a decision about your super, you should compare the costs, fees, risks and benefits of super funds. It makes sense to consider whether you can replace any insurance cover you may lose when you bring your accounts together, as well as any costs for withdrawing from other super funds and any investment or tax implications. This article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information. The Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax agent or a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law. Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the Trustee of Commonwealth Essential Super ABN 56 601 925 435 (Fund) and the issuer of interests in Essential Super which is a product of the Fund. A Product Disclosure Statement (PDS) for Essential Super is available in branch, from commbank.com.au/super or by calling 13 4074. You should read the PDS and assess whether the information is appropriate for you before making an investment decision. Colonial First State is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (‘the Bank’). The Bank provides certain distribution and administrative services to the Trustee. The Bank and its subsidiaries do not guarantee the performance of Essential Super. Information in this article is up to date as at the date of publication.