Superannuation. You’ve heard of it, you have it, but what do you really know about it?
For twenty-somethings, the benefits of super are really bloody hard to understand. I mean, why the hell should we care about money that we are supposedly going to get when we’re old, when we could be spending that money right now on a night out with our mates or on a new pair of jeans?
Now I know that your eyes are probably already starting to glaze over just at the mere mention of the word super, but I want to take a sec to get absolutely real with you about it. Super is insanely complicated. More complicated than any other financial topic I’ve covered so far. It’s so complicated, in fact, that I initially overwhelmed myself with so much information that it got to the point where I really started feeling like an imposter. I mean, if I couldn’t wrap my head around super, who the hell am I to be doling out all of this financial advice to other twenty-somethings? Fortunately, I took a step back from the stupendous amount of super information on the web, and started to focus on getting my shit together for this post. I realised that this blog isn’t just a way for me to preach to you about what you should be doing with every single dollar you earn. Nah, this blog is about finding a way for us twenty-somethings to work together to learn about difficult financial topics that our high school teachers steered clear from.
That’s why I’m going to be spending the next few weeks researching super so that I can relay the information back to you in a way that hopefully doesn’t bore you to tears. I’m planning on breaking this oh-so-daunting topic down into four segments over the next four weeks so that we can all come away from this with a much clearer understanding of what the hell super really is. I’m calling this my:
So, ladies and gentlemen, strap in because we are about to get started on the rollercoaster that is Segment One: What Is Super And Why Should You Even Care?
What Is Super?
Superannuation is money that you accumulate over your working life so that you can live off it when you retire (fingers crossed that’s sooner rather than later, am I right?!).
On my journey to discover more about what super is, I spoke to a panel of experts (ok it was actually just my relatives and my friends’ parents but they’re closer to retirement than us so that pretty much makes them experts ALRIGHT). One of my friends’ parents gave me a definition of super that stuck with me and so, obviously, I wanted to share it with all of you too:
Whilst you’re still coming to terms with what the definition of super actually is, try not to worry too much about some of the overwhelmingly complicated facts that are all over the internet. Just wrapping your head around the basics of super is more than enough for you to be able to make financially smart super decisions. I have, however, found four facts about super that I think every single Australian twenty-something should be aware of. Check them out:
How Super Works
Super works by growing your money through the amazing power of compound interest. Compound interest is interest earned on your initial investment AND on any previous interest you’ve already earned. By investing in a diverse range of assets, your super fund aims to grow your money as much as possible so that, hopefully, you can live off this money when you retire. Your fund invests your money into different assets including (but not limited to) shares, property, cash, bonds and infrastructure.
Have a look at the Uni Super Balanced Account, for example. If your money is in this account, it will be invested into 70% GROWTH assets and 30% DEFENSIVE assets.
GROWTH assets are used to grow your money over time, but with that expected growth comes a greater amount of risk. Examples of growth assets include shares and property. DEFENSIVE assets are usually less risky because they’re not intended to make your money grow as much. Cash is an obvious example of a defensive asset.
Right, so hopefully by now you have some kind of clue about what super is and how it works. If not, don’t worry, because the Money Smart website has a lot more information that is easy to understand. If you’ve got some time, be sure to check it out.
Why Should You Even Care About Super?
This question has been plaguing me for the last couple of weeks. Everyone I talk to about super has a different opinion on the topic which makes it confusing as hell for any twenty-something trying to get a solid answer. As a twenty-something, I can’t sit here and preach to you about the importance of super because I don’t have any real-life experience with it myself. I mean, as ready as I feel like I am for retirement, I ain’t actually that close to it. So, let’s take it back to what my panel of experts had to say:
You might have noticed that the experts keep banging on about the pension, but what the hell is that?
The pension is an income support that the government offers Australian residents over the age of 67. Currently, the maximum fortnightly pension is $944.30 for a single, and $1423.60 for a couple. So, the question that you need to ask yourself now is, would this amount of money be able to sustain your lifestyle?
If you’re struggling to comprehend how the hell you could possibly keep living your best life with that pension alone, then it should be pretty clear why super is so important for you to care about. I don’t know about you, but I ain’t working for the next forty years only to find out that at 65 I can’t sustain my lifestyle of bougee brunches and pub piss-ups. If super is going to allow me to keep living my best life when I’m old, either by providing me with more than enough money to have a comfortable retirement, or by topping up my pension payments, then count me in!
So, take it from me and my panel of experts, NOW is the time for you to start caring about your super. The earlier you start caring about it, the more money you’re going to have and/or the earlier you’re going to be able to kick your feet up and retire!
Alright, that is more than enough super talk for now. Next week on my SUPER SERIES, I’m going to be discussing the Questions You Need To Ask Yourself When Choosing The Right Super Fund.
In the meantime, check out some of these easy to understand resources that I stumbled across during my research. These sites make super relatively easy to understand and, now that you actually care about super, they’re worth checking out!
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The Stingy Bitch
Based in Sydney, Australia.
Created in 2020.
This site and all of it’s contents are provided for entertainment purposes only and do not constitute personal financial advice. All products that are mentioned are general product advice only, not personal product advice. Not all options are presented and my opinions are subject to change. All content and posts have been prepared as a general summary only and is not intended to be financial advice with respect to any particular matter. This post should not be relied on with respect to any particular matter. If you have questions about any aspect of the content or this site or otherwise require personal financial advice, you ought to seek financial advice. The author disclaims liability to any person who relies on this post.
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