What Is Superannuation?

Superannuation, or super, is Australia’s compulsory retirement savings system. Employers are legally required to contribute a percentage of your salary (currently 11% as of 2025) into your nominated super fund. This money is then invested by the fund over time, ideally compounding into a substantial balance by the time you retire.

It’s essentially your future paycheck—designed to help you maintain your quality of life once you’re no longer earning an income.

Why Super Matters More Than You Think

1. Time Is Your Greatest Asset

The earlier you start paying attention to your super, the more you benefit from compound interest. Even small improvements now can grow significantly over 30 to 40 years.

For example:
If a 25-year-old boosts their super by just $50 per month through salary sacrifice, assuming 7% average annual returns, they could have over $120,000 more in retirement compared to someone who starts at age 35.

2. Fees and Performance Compound Too

High fees can quietly erode your super over time. Choosing a fund with lower management expense ratios (MERs) and stronger long-term performance can save you tens of thousands in fees. Don’t just default into the fund your employer selects—compare fees, insurance premiums, and returns via sites like Canstar, Chant West, or ATO's YourSuper tool.

Key Things Young Adults Should Do

1. Consolidate Your Super Accounts

If you’ve worked multiple jobs, there’s a good chance you’ve accumulated multiple super accounts—each charging their own set of fees. Consolidating into a single fund can save money and simplify management.

This can be done easily through the myGov portal linked to the ATO. Be sure to compare features first, especially insurance coverage, before consolidating.

2. Choose the Right Investment Option

Most super funds offer multiple investment options: conservative, balanced, growth, high-growth, and sometimes ESG or sustainable portfolios. The differences come down to how much of your super is invested in high-risk/high-return assets (like shares) versus more stable assets (like bonds or cash).

In your 20s and 30s, you have time on your side to ride out market volatility, meaning growth or high-growth optionsoften make sense. These typically provide higher returns over the long term, although they may fluctuate more in the short term.

3. Make Voluntary Contributions

If you're in a financial position to do so, consider salary sacrificing or making after-tax contributions to your super.

• Salary Sacrifice: You contribute pre-tax dollars to your super (on top of employer contributions), reducing your taxable income.

• Co-Contribution Scheme: If you earn under $58,445 (2025 threshold) and make personal after-tax contributions, the government may match up to $500.

Both options are powerful ways to build your balance faster and access tax advantages—particularly useful for young professionals expecting salary growth over time.

What About Access?

A common concern among young people is that super is locked away until retirement, usually between age 60–67, depending on your birth year. This is true, and while it may be frustrating for those prioritising travel or buying property, it’s also the point: super is protected from impulsive withdrawals and designed to safeguard your future.

That said, your super is not a replacement for other investing goals. It should be one pillar of your long-term wealth plan, alongside other tools like ETFs, savings accounts, or property.

The Bottom Line

Ignoring your super in your 20s and 30s is one of the most common—and costly—financial mistakes. By being proactive now—consolidating accounts, reviewing fees, choosing a growth-oriented investment mix, and contributing extra if possible—you can give your future self a serious financial advantage.

You don’t need to micromanage it. A once-a-year review and a few smart decisions early on can help ensure your super does what it’s meant to do: fund a comfortable, secure, and dignified retirement.