If you’re just starting in the workforce, it pays to learn about superannuation for young people and how you can make the most of it. Retirement may seem a long way off, but the sooner you start planning for it, the better off you will be! Many people don’t learn about super until later in life, but implementing some strategies when you start earning wages will reap long-term benefits.
Your employer must contribute 11% of your ordinary earnings to your chosen super fund. This earns interest in the fund and accumulates throughout your working life. The more you put in, the more you earn as the interest compounds over time.
Make sure you research super funds before signing up with one. Check their fees, investment performance, insurance and financial advice options. Industry funds are a good starting choice.
Tips for Young Workers
- Check your online super account to see that your employer is contributing the superannuation guarantee amount.
- Consider contributing a little extra to your super fund if it won’t cause financial hardship. You can sacrifice earnings from your employer, (which reduces your taxable income), or you can contribute extra from your after-tax earnings.
- If you’re working as a contractor, check whether the business engaging you should be paying your super. If not, get into the habit of contributing at least 10% of your earnings towards your super fund. Unfortunately, many sole trader contractors have a lot less super than their employee counterparts, which means less money for retirement.
- You could be eligible for up to $500 of co-contribution from the government – that’s free money to put towards your compounding investment!
Start Planning Now for Super Accumulation
Start learning about superannuation for young people when you first enter the workforce, and you’ll be better off in retirement. The sooner you start to contribute to super, the longer it has to earn compound interest.
Talk to us about how to start getting your super to work for you as soon as you start earning. Talk to us now and get ahead for your next annual SMSF return. If you want further tax advice please get in contact with us.