Superannuation: What you Need to Know as a Student
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We get it. Student life, while different for everyone, is consumed with juggling lectures and tutorials, essay writing and group assignments, cramming, making friends, and learning something new every day. If you’ve got a part-time job and a social life to consider on top of this, it doesn’t leave much time to think about superannuation.
But did you know that super is one of the most significant financial assets most Australians will ever have? Make the wrong decisions early on, and your decisions can be hard to undo.
What is superannuation?
Superannuation, also known as “super”, is money that employers are legally required to put aside on behalf of their employees. Nearly everyone with a job—be it full-time, part-time or casual—is required to join a government-approved superannuation fund. Over time your super compounds, so that when you’re able to access your money, it can provide financial support for your later years.
How does superannuation work?
When you start a new job you’ll be asked to nominate a superannuation fund. Once you’ve done this, your employer will put a set amount of money into a superannuation account on your behalf every time you get paid. This money (equivalent to 9.5% of your wage) is then invested by the managers of the fund into things like shares, property, government bonds and cash deposits.
Let’s say you’re 21 and you earn $800 from your regular fortnightly wage, plus a bonus of $150 and shift loading of $50. This means, your total income is $1000. Your employer would need to put $95 into your super account ($1000 x 0.095).
If you continue like this, in 10 years time , you could have a super balance of around $27,500!
Pro tip: look organised on your first day of work by opening a super account before you start work.
The key thing to remember about superannuation is that it’s YOUR money. With this in mind, choose a fund that:
(a)Can find lost super accounts and help you combine them
(b)You can keep when you change jobs
(c)Has transparent reporting so you know what’s happening with your money.
Some funds are designed to protect members’ balances when they’re starting out with super. If you’re a low-income earner with a low super balance—which as a student you likely are—and your employer allows you to choose your own fund, you can choose a fund that has zero fees for balances under $1,000, like Student Super.
Choosing a super fund is a bit like dating—you should start with some key things you’re looking for and see what fund best ticks your boxes. Factors you might like to think about include:
Fees – the lower the better or your employee contributions can quickly get eaten up.
Investment options – make sure you’re comfortable with the options and risk.
Performance – look for consistently good performance.
Insurance – check what cover is available and what it will cost.
Extra benefits – specifically designed to suit your needs/lifestyle.
Just like a date, you want a fund you’re compatible with. With Student Super, you can set up a super account before you’ve even got your first job, so that you’re ready to go when the right job comes along. You can also continue to grow your super when you graduate, as your Student Super account will change name to Professional Super. Professional Super is matched to the next part of your journey, and has educational benefits that are better tailored to young professionals.
If you don’t really understand super and your financial focus is elsewhere, you’re not alone. It’s not just students that are disengaged with super—it’s Australians in general.
We are sure you’re aware that housing affordability is worsening and home ownership is decreasing. With a potential increase in interest rates and an over-dependence on interest-only loans, we may see a cultural shift towards other ways of securing our financial futures.
If you’re 18 and over, and you earn at least $450 (before tax) in a calendar month, you should start thinking about your super. It could be one of your biggest assets in the future.
Super is more important than you may realise, so join us today at Student Super to start saving.
Note: Superannuation projection is based on ASIC’s MoneySmart calculator. Calculations are based on an income of $26,000 p.a. fees of $78 and 0.99% p.a., and a growth investment strategy.
This is general information only and does not take account of your individual investment objectives, financial situation or needs. Before acting on it, consider if the information is appropriate and whether you need to speak to an accredited professional.
You should also consider the Product Disclosure Statement before making any decision. This product is issued by Tidswell Financial Services Ltd (ABN 55 010 810 607, AFSL No. 237628, RSE L0000888) as trustee for Student Super Professional Super which is a sub-fund of the Tidswell Master Superannuation Plan (ABN 34 300 938 877, RSE R1004953). Student Super Professional Super Pty Ltd (ABN 31 617 160 791; AFSL No. 499786) is the Founder and Promoter of Student Super Professional Super which is marketed under two brands; Student Super and Professional Super.
Past performance is not indicative of future performance.