Is super worth it at all?

When you start out in the workforce, retirement seems light years away.

Reaching Friday afternoon often seems more important than reaching age 65 with a sufficient nest egg.

This mentality is understandable for under 30s, who are earning less and possibly saving for a closer goal, such as a car, holiday or house.

It only takes two simple graphs to see just how big a role super could play in your retirement if you start making extra contributions earlier rather than later.

The below graph describes a 25-year old on an average salary of $70,000 retiring at the age of 65, with no extra contributions.

The next graph describes what would happen if the same person contributed an extra $25 per week to their super account over their career (source: Money Smart).

The difference is about $40,000, which could go a long way in retirement.

You also have the option of making after-tax super contributions to your super account, with some appealing benefits. If you’re a low-income worker, you may want to take advantage of the co-contribution scheme. Under the scheme, the government will contribute 50 cents for every dollar of after-tax super you contribute with a cap of $500 per year. That’s free money from the government and a chance to grow your nest egg at a faster rate.

If you’re still questioning the value of topping up your super, ask yourself who is going to look after you in retirement. While the Australian Government does offer welfare options for retirees, the Centrelink system is likely to change in the next four decades – possibly leaving you out in the cold.

There are a number of other ways to make your super journey really worth it in the long one. These include consolidating all your super into the one account (to avoid extra fees and keep tabs on its progress) and considering salary-sacrificing (trading a portion of your income for a super contribution taxed at the low rate of 15 per cent).

For more information about your super options, go to the Industry Super website.

First Super commissioned The New Daily to research and write this article. The views expressed are of The New Daily.

This publication was issued by First Super Pty Ltd (ABN 42 053 498 472, AFSL 223988), as Trustee of the First Super superannuation fund (ABN 56 286 625 181). It does not consider your personal circumstances and may not be relied on as financial advice. Content was accurate at the date of issue, but may subsequently change.