What you need to know about your super in your 20s, 30s & 40s

What you need to know about your super in your 20s, 30s & 40s

Verve Super is offering all Women’s Agenda readers a free phone consultation with a super specialist to learn how to set yourself up for retirement, no matter what your age. Book in now. (Partner Content)

With recent statistics showing women retire with 47 percent less super than men, there’s never been a better time to get on top of your future finances. Verve Super, Australia’s first female-focused fund owned and run by women, is making this process even simpler.

Established in 2018 by founders Christina Hobbs, Zoe Lamont and Alex Andrews, Verve positioned itself as an ethical fund, looking to shake up the industry.

And there’s a huge opportunity for them to do so.

Despite the glaring gender retirement gap, women in Australia still hold $1 trillion in superannuation. So much of the time however, this money is invested in companies that fail to have women’s best interests, or society’s more broadly, at heart.

Verve’s ethos by contrast, is to invest only in profitable companies that are committed to serving people and the planet. As an example, Verve doesn’t invest in any fossil fuels or companies without a woman on the board. Moreover, every time a woman switches her super to Verve, the fund donates to micro-finance organisation, GoodReturn, with proceeds going toward supporting women in developing countries to start their own ventures or develop necessary business skills.

The team at Verve are passionate about harnessing and expanding the financial power of women, and ensuring all women are afforded the right support throughout different life and career stages.

CEO Christina Hobbs, who earlier this month took home the award for Emerging Female Leader in the Corporate Sector at the 2019 Women’s Agenda Leadership Awards, sat down with us recently to share the best tips for getting super sorted in your 20’s, 30’s and 40’s.

Super in your 20s

Check your employer is making right and regular super payments

ISA analysis has shown that one in three workers — about 2.85 million people — are being ripped off by almost $6 billion in super by unscrupulous employers not paying their full entitlements.

Most super funds have an online portal that you can log into to check your balance and the contributions your employer is making. You should. It’s recommended that you check your balance at least once a month and never trust your pay slips alone.

Start now: Make the most of compound interest by making additional contributions

Super is cumulative and the growth can be exponential when you make additional contributions. This is the amazing power of compound interest.

Here’s an example of how it works:

If Steph starts saving an additional $200 a month into her super at age 25, with an average annual return of six per cent, by age 65 she’ll have contributed $98,400 of extra deposits. Due to the power of compound interest, these extra contributions will have grown into $425,331.

Compare this to Carly, who starts saving the same amount at age 35. She only saves slightly less at AUD$74,400, with the same rate of annual return – six percent. At age 65, Carly will end up with only $215,761 from her extra contributions. Starting 10 years earlier can double your super savings in the long term.

You can read more about how to make additional contributions here.

Check out the First Home Super Savers (FHSS) Scheme

The FHSS Scheme is a government initiative that lets you save for your first home using the super system. With a lower tax rate on investment earnings, it may be a good alternative to keeping your savings in a bank account for some people and it may help you to fast-track your deposit. There are important rules governing the FHSS scheme,  so make sure you understand them before signing up.

Think about the world you want your super to be building

While most Australians think that their money will be invested ethically, this isn’t the case.

Each year Australian super funds invest billions in weapons and armaments companies; fossil fuel companies (coal, gas & oil); tobacco and gambling. 

Have a think about the world you want your money invested in and make a decision based on your own values. You can see how Verve invests here.

Super in your 30s 

Stick to one super account

Many people end up with multiple super accounts courtesy of having several full-time or part-time jobs in their 20s. 

At Verve, every members’ existing super accounts are found for them when they join and in most cases, most people have more than three accounts. 

Paying multiple sets of fees could cost you tens of thousands of dollars by the time you retire. So think about bringing them all together into one super fund to avoid paying fees on each different super account. You can also find all your existing accounts in your MyGov portal. 

Consider topping up your super before or during career breaks

Making personal contributions either prior or during career breaks ensures your super maintains steady.This will help mitigate the impact of time out of the workforce on your overall retirement savings.

There are also some great tax advantages in making additional contributions. You can learn about how to make additional contributions here.

Take advantage of government co-contributions  

If you are earning a low income, you could be eligible for a government co-contribution into your super account of up to $500 a year when you make personal (after-tax) contributions to your super fund.

Make super fair in your relationship with spousal contributions

Many women in their 30s (and some men), will take a significant period of time out of work in their 30s, to engage in  unpaid caring work in the home. 

It’s great to have a discussion with your partner about how you will make super, and saving for retirement, fair in your relationship.

 Some couples opt to split super, or for the working partner to contribute to the other partner’s balance during this period. There can also be a valuable tax benefit in making additional contributions and splitting super contributions between both accounts.

Ask your employer to pay super on parental leave

Right now, it is not compulsory for Australian companies to pay super while you’re on parental leave. However, many employers do offer to pay super on parental leave. This is worth a conversation.

If you’re not sure how to have this conversation or where to start, book a time with a Verve Super Specialist – we provide this service for our members and can provide you resources on how to have this conversation.

Do you have insurance? If so, is it right for you?

Often life insurance is attached to your super account. This typically includes death cover, total and permanent disability and income protection. Mortgages and children mean that if we were to pass away or be unable to work for an extended period of time, we would have these costs that would still need to be covered. That’s where insurance comes in. It might be time to consider what level of cover you currently have and if it’s right for you and your family.

Set a retirement savings goal

Spend some time thinking about how much you would like to have in your super account when you retire. If you have a clear goal, you are much more likely to achieve it.

Christina recently wrote an article busting the $1 million myth. The good news is that most women won’t need this much. Once you have set a goal, you can work out if you are in the correct investment option and decide if it is beneficial to make additional voluntary contributions to achieve it.

Super in your 40s and 50s 

Make additional contributions

Think about upping your super with either pre-tax or after-tax contributions. Between you, your employer and anyone else who contributes to your super, you are allowed $25,000 in pre-tax contributions (this means you don’t need to pay income tax on this money). You can organise these contributions, known as ‘concessional contributions’, through a ‘salary sacrifice’ arrangement with your employer, or make the contribution through your super fund and claim your refund and tax time. 

Depending on your income, you could be eligible for a government co-contribution into your super account of up to $500 a year when you make your own personal contributions. 

Have you added beneficiaries to your super fund?

If you pass away the money remaining in your super fund will be allocated to the beneficiary you’ve nominated. If you haven’t made a clear, binding, beneficiary nomination, the process for a loved one to gain your superannuation will be challenging and time consuming. So make certain this is up to date.

Check back in with the retirement plan you set in your 30s 

Consider what the next 20 years of work life may bring and what a comfortable retirement might look like. This may be a good time to speak with a financial advisor about your retirement goals and putting in place a strategy to get you there. No matter your financial situation, having a plan can help you feel more in control.

This is a great time in life to think about the legacy that your money is building and the world that your money is invested in.

Verve does not invest in companies that harm our society or pollute our planet.

Check out your super fund website, if they aren’t transparent about how your money is invested, chances are it’s invested in fossil fuels, armaments and companies that are known to abuse women in their supply chains.

If you want to learn how to consolidate your super accounts, set a retirement plan, or just have a niggling question, book in now

 

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