What Exactly is Superannuation? 🐨
Think of superannuation, or "super," as a long-term savings account designed specifically for your retirement. While you work, a portion of your income is put aside into this account by your employer. This money is then invested on your behalf, allowing it to grow over your working life so you have an income when you decide to retire.
For most people, your employer is legally required to contribute a minimum percentage of your salary into your super fund. This is called the Superannuation Guarantee (SG) which has recently increased to 12%.
Key takeaway: Super isn't just a number on your payslip; it's your money, growing in the background to support your future self.
Why Can't I Touch It?
The whole point of super is to make sure you have money when you're no longer working. To ensure the funds are there for retirement, the government has put strict rules in place, known as "preservation rules."
You can generally only access your super when you reach your preservation age (which is between 55 and 60, depending on when you were born) and you have retired. There are some special circumstances where you can access it early, such as severe financial hardship or specific medical conditions, but these are exceptions, not the rule.
How Does It Grow? 📈
Your super fund doesn't just hold your money in a bank account. It invests it in a mix of assets, such as:
- Shares: Owning a small piece of companies listed on the stock market (e.g., BHP, Commonwealth Bank).
- Property: Investing in commercial real estate like office buildings or shopping centres.
- Infrastructure: Funding large projects like airports and toll roads.
- Cash and Bonds: Lower-risk investments that provide stable returns.
By spreading your money across different assets (diversification), your super fund aims to grow your balance over decades. This is the power of compound interest—the returns your money earns also start earning their own returns. The earlier you start, the more time your money has to grow!