ASFA CEO Dr Martin Fahy and young Australians discuss super – why it’s the best bet for saving for retirement.
Research by ASFA has found that young Australians aged under 30 years tend to have more money in their superannuation accounts than their bank balances, yet 40 per cent of young people have no idea what their super balance is and a further 16 per cent only have a vague idea.
ASFA found around a quarter of Australians aged 15 to 19 had a superannuation account as did around 75 per cent of those aged 20 to 24. Average balances are not that large but are substantial relative to what most people had in their bank account.
* According to the latest available data from the Australian Bureau of Statistics
The research also revealed more than half of young people aged under 29 years strongly support superannuation as a good way to save for retirement, yet many significantly underestimate the amount of money they will need to retire.
Young people expect on average that they will need $625,000 while those aged 60 years and over staring down retirement expect on average that they will need nearly $1 million.
Young people who have multiple accounts and don’t consolidate those accounts risk eroding their super balances unnecessarily by paying multiple fees and charges.
ASFA found more than 60 per cent of young Australians have multiple super accounts due to lethargy in consolidating them and 30 per cent report trouble in finding old accounts, despite ready online access available via MyGov.
Young people and super facts
Many young people will have a super balance. If you have a full time, part-time or even casual job and you earn more than $450 in a calendar month your employer is required to make super contributions to a fund on your behalf at the rate of 9.5 per cent of your wages. If you are aged less than 18, super contributions are only payable if you work more than 30 hours per week.
If you are employed, check your payslip and your superannuation account transaction records to make sure you are getting the contributions you are legally entitled to. If you are not, the first thing you can do is take it up with your employer. The Australian Taxation Office (ATO) can also help you with information and advice on your super entitlements and recovering any contributions your employer has not paid.
Multiple accounts can cost you dearly over time. Each account will typically have a fixed administration charge of at least $100 a year. The more accounts you have, the more administration fees you will pay. As well, with each account there could be associated insurance cover, with deduction of premiums of $200 or more per account.
While insurance coverage can be beneficial you should check to see you have the cover you want or need, particularly if you have more than one account. More than 25 per cent of people aged under 29 report they are not sure whether they have insurance cover, let alone knowing anything about its details.
Consolidating super accounts is not hard. All you have to do is log into your MyGov account and go to the ATO section to view the superannuation accounts you hold. Consolidating your super into just one account is only a few clicks away once you have mastered your MyGov login.
Reproduced with the permission of the The Association of Superannuation Funds of Australia Limited. This article was originally published at http://www.superguru.com.au/grow-your-super/youngpeople
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