Money's probably tight. By the time you've paid rent or a mortgage, covered your bills, saved for your next holiday or treat, and had a bit of immediate fun, there may be little left each month.
So thank goodness in Australia the equivalent to 9.5 per cent of our salaries automatically tips into super, ensuring we can still manage all those things when we – ahhh! – stop having to work to earn.
Or that's the theory. The reality, unless you start paying attention, could be very different.
I've modelled the average real-life Aussie and found their untended super will be frighteningly inadequate. But first you need to know a "comfortable" retirement requires an end-balance – conservatively – of $545,000, says the Association of Super Funds of Australia (more if you still need to cover rent or a mortgage).
My number crunching reveals the typical 39-year-old male who ignores his super is on track for a fund of $308,474 at retirement at 67, while the same-aged female will have $238,381.
That's 43 per cent short of ASFA's comfortable retirement for 39-year-old men. But for women, it's a dreadful 56 per cent gulf.
My calculations are based on current true balances according to ASFA (for age 35-to-39-year-old men they're $55,279 and for women, $34,812, and for 25-to-29-year-olds they're $18,072 and $14,812); average weekly adult earnings (to produce an annual $88,114 for men and – ouch – $71,219 for women); and the wage inflation, fee and return assumptions of moneysmart.gov.au's super calculator (assumed annual growth is 5.7 per cent). You can use the calculator to reveal your specific situation.
The earlier you start, the cheaper it is to amass serious moolah. And because compulsory super didn't come in until 1992, older readers really need to take action. Here's your easy 2017 super overhaul.
1. Check you're getting what's yours
This might sound silly but one third of Aussie workers are being short-changed on super entitlements, says a recent report from Industry Super Cbus. Everyone over the age of 18 who earns at least $450 a month (or under it if they also work more than 30 hours) qualifies for a 9.5 per cent contribution from their boss. You can check by finding that line on your pay slip, making sure the number is 9.5 per cent of your before-tax salary and then seeing if that's actually going into your super fund (at least quarterly).
2. Grade your fund
Stick with a dud fund and it could cost you your retirement; Rainmaker research reveals just 1 per cent extra in returns, or 1 per cent cheaper fees, can mean $250,000 extra at retirement (from age 25 to 70). The benchmarks by which to judge a balanced fund are an average annual return equal or above 7.3 per cent last year (least important), 9.8 per cent over five years (more important) and 5.1 per cent over 10 (most important). For other fund types, see here. You don't want to be paying more than about $1000 a year total fees on a $100,000 fund, or 1 per cent (and fees should get relatively cheaper as your balance grows). Make a commitment to read your statement and review your fund each year, too.
3. Get the free contribution
You'll need to find $1000 to do this, but lower income workers (on less than $51,021) will get a fund top-up of up to $500 from the government for their trouble. Do it before June 30 each and every year and we're talking serious money.
4. Claim the deductions
This one's especially relevant where one spouse is taking time off (paid) work to care for kids. For anyone earning less than $10,800 in taxable income (rising to $40,000 from July 1), an after-tax super contribution of $3000 will earn their spouse a tax offset of up to $540. More free money.
5. Prioritise your (after work) play
Of course you could actually pay in extra, because the chances are the above alone won't sustain your standard of living. Remember what you put in via salary sacrifice is before income tax and after only the 15 per cent super contributions tax – so you typically get to keep far more of your money. Ladies, to keep up, I recommend you salary sacrifice at least 2 per cent always – because don't forget we live longer too.
Nicole Pedersen-McKinnon is a commentator and educator who presents Smart Money Start, fun financial literacy, in high schools around Australia. themoneymentorway.com.