Young Australians have more in superannuation than they do in the bank, but are not informed about super, according to research by ASFA.
Research by the Association of Superannuation Funds of Australia indicates that 40% of young Australians have no idea what their super balance is and 16% have only a vague idea.
Additionally they are significantly underestimating the amount they would need to retire.
“Young people expect on average they will need $625,000 while those aged 60 years and over staring down retirement expect on average that they will need nearly $1 million,” said ASFA.
According to ASFA over 30% of people aged 18-25 have more than one super account and 10% have three or more accounts. 20% of people aged 26-30 have three or more accounts.
The ASFA research found that more than 60% of young Australians have multiple super accounts “due to lethargy in consolidating them” and 30% report trouble finding old super accounts, despite online tools.
“Young people are also failing to consolidate multiple super accounts and therefore risk eroding their super balances unnecessarily by paying multiple fees and charges.”
ASFA has launched a competition for Youth Week which is designed to get young people to think about the benefits of long-term saving in superannuation.
People aged 15-25 are encouraged to enter by explaining if they would prefer $300 in cash now or $1,000 in their super account. Details on the competition are available here.
“We hope this competition encourages young Australians to consider the long-term benefits of super and the magic of compound interest,” said ASFA CEO Dr Martin Fahy.
“Super is a long term investment and a key part of everyone’s employment conditions. Although many young people may see super as a distant prospect, we are keen to experiment with some behavioural economics to get them thinking about super in a different light.”
ASFA says that $1,000 invested in a super fund by a young Australian would deliver $4,000 on average at retirement, in today’s dollars.