Common super myths you need to know
Whether you’re working full-time, part-time, casually or in multiple jobs, there’s never been a better time to pay your super attention.
From 1 July, the Super Guarantee will rise to 10.5% and the $450 monthly minimum wage threshold for Super Guarantee contributions from one employer will be no longer. Now is the time to pay your super attention.
Below we bust wide open some of the common myths you might have heard about super, and the simple steps you can take today to get some ‘quick wins’ under your belt and your super on track.
Myth #1: Super is not yours until you retire
Your super is designed to help you save for retirement, but that doesn’t mean it doesn’t already belong to you. While your employer is paying your Super Guarantee contributions, those contributions come from your hard earned salary. Think of your super as you would any other savings account, only this one is the most important one you have.
Get into the habit of checking in on your super balance by making it a monthly habit to log in to your online account.
Myth #2: You’re not in control of your super
You may feel that you have no control of your super, but there is plenty you can control, including where you put it and how many accounts you have. If you have more than one super account, you’re probably paying more fees than you need to.
Myth #3: Super is not an investment
Your super is invested to help it grow. If your money sat in a bank account, over time inflation would chip away at the value of your savings and it wouldn’t be worth much by the time you retire. The choices you make about where your super is invested can make a big difference to how fast your super grows, so it’s important to understand your investment options and what is most appropriate for your age and life stage.
Learn about the range of investment options you have and make sure it’s right for you and where you’re at in life.
Myth #4: Small contributions won’t make a lot of difference
Thanks to compound interest, the more your super grows, the faster it grows. That’s because you are earning interest on any super contributions, plus the interest you’ve earned to date – meaning, you’re earning interest on your interest. Over time, this compounding effect can have a huge difference to your super balance.
Make a habit of adding to your super when you can, or consider a salary sacrifice arrangement with your employer. Contributing to your super through your pre-tax salary can boost your savings for retirement and reduce the amount of personal income tax you pay.
Myth #5: Your super is covered by your will
Your super is considered a ‘non-estate’ asset, which means that it’s not covered by your will. Should the worst happen, you’ll want to make sure that your super is passed on to your nearest and dearest. You can do this by making a binding or non-binding death benefit nomination.
Without this, your super will be distributed to anyone eligible, including your spouse / de facto partner, your children, or anyone who is financially dependent on you, which may or may not be in line with your wishes. The best way to ensure your wishes are followed is to make a death benefit nomination.
Your super is a long-term savings strategy. While you may not reap any of the benefits yet, one day, you’ll be glad you invested the time to take care of it.
Next Steps
- Get to know your superannuation – how much you have and where it is invested
- Find your lost super and consolidate it into one account. Not only will this save you money in fees, having one place for your super means that it’s easier to keep track of.
- Check whether you’ve made a death benefit nomination, and if not, make one as soon as you can.
