Don't Get Caught With Your Pants Down; Contribute To Your Super While You're Young

If I won the lotto today, would I make a contribution to my super fund?

Well, sure. Just after I’ve bought myself a house, car and taken a trip overseas.

Superannuation (or ‘super’ for short) is the money we save for retirement. For many of us, putting our money towards super does not seem like a big deal. It is out of sight and out of mind; some far off account of money that we have to wait a very long time to access – and, with an increasing ageing population, that amount of time keeps growing.

So, why would I spend (at least 'some of') my lotto winnings on it? Here’s why.

Your employer pays 9.5 per cent of your salary into a super fund. Let’s say you start full time work at the age of 22 and you decide to retire at 70 (being optimistic here).

That is 48 years of your employer putting 9.5 per cent of your salary into a super account. Sounds like a lot of money, right? However, some things may affect how much money you collect in super.

For example, if you are a woman in the workforce you start at a disadvantage because of the gender pay gap. Another GFC may occur, leaving you without a job for a period. Or, you could retire early (for reasons that may or may not be in your control).

If you have generally kept a healthy lifestyle, alongside advancing medical technology, it is likely you will live to 90 years of age, or more. Therefore, after retirement, you – hopefully – still have at least 20 odd years to pay bills, buy groceries and occasionally take a holiday with just your pension and whatever money you have in your super account.

Take a second to think about how much money your household spends on all these things every year (plus rent or a mortgage, both of which might need to be paid after retirement too). If you’re thinking you may need a little more money, go make a super contribution right away.

According to Australian Super, the average retirement payout (determined by the average savings for those aged 60-64) was $112,600 for women and $198,000 for men. That is just under $10,000 a year for men who have another 20 years ahead of them.

Remember, if you are halfway through retirement and you start running low on cash, it will be very difficult to get back into the workforce. Maybe it’s best to take the time when you’re young to build up your super.

At the end of the day, it is worth contributing extra to your super fund when you can afford to do so. You never know what curveballs life may throw at you, so just be proactive and dodge those hits.

Congratulations to Prachi for winning this writing challenge, answering: Is It Worth Contributing Extra To Your Super Fund? Prachi wins a $50 Westfield gift card for her submission. For your chance to win, check out our latest writing challenges in our Comps section. Also, be sure to follow this guide on how to win the writing challenge!

Photo: Fox.