You don't have to be under 40 to enjoy the benefits of our superannuation system. Introduced in 1992, superannuation is the national savings strategy that aims to provide an adequate retirement for all Australians – either supplementing or replacing the Aged Pension.
But if you're under 40, the benefits of properly managing your super are exponentially higher than someone on the 'golden' side of middle age. That's because the benefits of compound interest have longer to work their magic on your compulsory contributions. You normally start adding to your super fund once you've got your first job, after all. That's a lot of years to unleash compounding on that 9.5% chunk of earnings.
How to maximise your super potential
In theory, there are only 3 ways to increase your returns from super: earn more, get a higher return and pay less fees.
Since I'm sure we're all trying to earn more anyway, the first point is somewhat moot (but by all means, keep trying!)
Getting a higher return is tricky, because investment returns are normally dictated by markets (over which we have very little control). Ensuring your super is invested in a 'high-growth' option rather than a 'balanced' or 'conservative' option if you're under 40 is probably your best bet.
Fees are where most people can make the biggest difference. Because fees are how super funds make their dough, there will always be an incentive for your fund to charge you for their services. Shopping around for the lowest fee can save you literally hundreds of thousands of dollars over a lifetime.
Making sure you aren't being charged insurance premiums for services you don't need is also an important thing to consider.
But the simplest and most important thing you can do for your superannuation returns is to make sure you only have one super fund! Often, young people in particular end up with multiple super funds as a result of having multiple jobs in their early working years.
Two super funds mean 2 sets of fees to pay and that's a double drain on your returns and eventual retirement. So, if you have more than one super fund, consider picking your favourite one and closing any others. Doing so will likely save you a considerable sum of money.
Foolish takeaway
In my opinion, getting your super right is one of the best investments you can make – especially if you don't fancy doing your own investing. Just by following these simple steps, you could potentially end up with hundreds of thousands of dollars of extra cash when you eventually retire. I know it feels like a long way away and not worth bothering with for some people, but your future self will thank you!
