Superannuation Tips for Young Professionals
Superannuation Tips for Young Professionals
by Matthew McCabe, Financial Advisor of Newcastle Advisors
“Superannuation doesn’t need to be complicated—let’s strip it back and cut through the noise.”
As a young professional, your superannuation is the most tax-effective investment vehicle you’ll ever encounter. While you can pay up to 47% tax on income in your own name, super caps it at just 15% throughout your working life and 0% on earnings in retirement. That’s a tax advantage you simply can't ignore.
But super isn’t just about tax savings. It's about control and flexibility. You choose how and where your money is invested, whether that’s in property, shares, or even alternative assets like artwork and collectibles. But not all super funds are created equal. Some offer clear, transparent options, while others make it difficult to understand where your money is going. And that’s where doing your homework or seeking expert advice becomes critical.
We like to reverse-engineer the situation: where are you now, and where do you want to be by retirement? Understanding how much income you’ll need from age 60 onwards is key. What are your retirement income targets? Do you still have a mortgage to pay off? How long will you need your savings to last—potentially through to age 100? These questions set the framework for how much you should contribute now and the type of investment risks you need to take to achieve those retirement goals.
One area often overlooked by young professionals is insurance through superannuation. Some funds offer it; some don’t. But be cautious—just because your super provides insurance doesn’t mean it's the right cover for you. Getting properly underwritten (where the insurance company does an exam on you personally) before something goes wrong is crucial. You don’t want to find out you’re not covered when you need it the most. At Newcastle Advisors, we always recommend personalised insurance advice, tailored to your unique situation, so that your financial future is protected.
As a young professional, you could easily spend as many years retired as you do working.
Starting your career at 20 and retiring at 60 gives you 40 years of work, but with life expectancy stretching to 100, you may also face a 40-year retirement. That’s why it’s crucial to have a plan in place today to ensure your superannuation can support you for the long haul. With the right approach, superannuation becomes more than just a savings account—it’s your ticket to financial independence. After all, you're not just planning for your career—you’re planning for the rest of your life. Plan for today, with an eye on tomorrow.