I seem to have a lot of readers from the United States, so I thought it would be useful to provide a brief and generalised overview of Superannuation arrangements in Australia before I launch into my musings.

Superannuation in Australia
In Australia, it is compulsory in most circumstances for employers to pay a proportion of an employee’s salary into their superannuation fund, which is effectively their retirement savings. The minimum proportion is 9.25% as at July 2013 however this is set to increase incrementally and very gradually, to 12% by 2021). Employees are encouraged to make additional payments into their superannuation funds, which can be done either before or after tax, each approach having their own pros and cons. The employee’s date of birth dictates when they are able to access their funds. As I was born after 1964, I won’t be able to access my retirement savings until I’m 60, 35 years from now.

Why should a 20-something bother thinking about their retirement?
This was my mentality up to the age of 23. I wanted to live in the ‘now’ and being 60 was simply unfathomable. Anyway, what if I get hit by a bus next year? Then I would have been squirreling away extra money for nothing. My employer already makes contributions to my retirement, so that will be fine. (more…)