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Growing your super after early release. Three steps to take now.

March 1st, 2021

Around three million Australians withdrew super early last year to the tune of more than $36 billion. That’s more people than live in the whole of Western Australia, and about a third of the amount that’s been paid out on JobKeeper.

Since then, there have been calls for the Government to top up super for young, low-income earners who took super early, with concerns they’ll have nothing to live on in the future. But are we all worrying about nothing? Can’t we simply re-grow our balances over the next 30 years of work?

Yes and no. Huh?

While projections show that young people, low-income earners, and women particularly will have a hard time re-building their super, this is not the same as not having a shot at a comfortable retirement. (FYI, when we say “comfortable” we mean having enough money to do more than just pay the bills.)

This is a more detailed explanation of why these groups are disproportionately affected, but in short, it comes down to two things:

  1. Women and casual or gig workers typically spend more time out of “traditional” work. This means not only do they have less super to begin with, but they also have less opportunity to make up the shortfall.
  2. A big part of how your super grows is by building on itself – known as compounding interest. Wipe out or reduce your balance and you take away your super’s ability to keep generating its own wealth.

These are tough challenges, but if you fall into this group, there is plenty you can do. Let’s keep going.

So, what’s to be done?

We hate to break it to you, but you will have to pay more attention to your super than you might like. (Your future self will thank you for it – promise.)

Here are three steps to get back on track after withdrawing super early.

Step 1. Know what you’re working with

It’s better to know than to wonder. Check your current super balance and any insurance benefits in firstonline or by contacting us.

Whatever you find, it’s okay – at least now you know. This is a good thing.

If your insurance has been cancelled because you couldn’t pay the premiums, or you’re not sure if you have or need insurance, that’s something we can easily talk through with you.

Step 2. Hold on to your super

If your account has $6,000 or less in it, you may need to act soon to stop it from being automatically transferred to the ATO. This happens when members have a low balance and there has been no account activity for 16 months.

You can stop a transfer from happening by:

It pays to keep your money with First Super, rather than with the ATO. Their main goal is to preserve it – ours is to protect it AND help it grow.

Step 3. Contribute extra to super yourself

This is the big one.

You don’t have to rely only on employer super contributions to grow your retirement savings.

Consider contributing to super yourself. You could:

  • transfer money from your bank account, and you might even receive a
    Co-contribution from the government, or
  • salary sacrifice some of your wage if you’re earning a regular wage. You’ll be surprised how much your balance can grow from small extra amounts each pay cycle.

Use the Super Contributions Optimiser to see how extra contributions could significantly boost your super. Or find out more about how to start contributing more now.

If you want our advice on what type of contribution could be best for you, give us a call on 1300 360 988 and we’ll be happy to help.

Make it count

Remember, super isn’t the only source of income in retirement. It works in combination with the Age Pension and other entitlements to support you. For this reason, even a modest super balance can make a big difference – so it’s worth doing the work and making yours count.

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