What’s more, taking time every now and then to check in on your superannuation could end up making a significant difference to the size of your retirement nest egg. Here are five super health-check steps to consider, regardless of what stage you are at.
1. Consider consolidating
We’ve covered this in more detail elsewhere, but to summarise, consolidating duplicate or lost superannuation accounts can be a way of streamlining your retirement savings to potentially put your super on a stronger path. Having your super in one place, or at least fewer places, can potentially mean paying less in fees, a larger return on your single balance (if it’s rolled into the better-performing fund), and you get to avoid the headache of keeping tabs on multiple super balances.
Keep in mind although consolidation is beneficial for many consumers, it isn’t the right move for everyone, and it is worth doing your homework before deciding one way or the other. When seeking the right fund for you there are many factors to consider, such as the fees charged, whether the insurance offering is suitable for you and the education and advice available. Remember too that past performance is an important consideration because it gives an indication of what a fund has been capable of delivering in the past through varied market conditions, but investments can go up and down, so past performance is not necessarily indicative of future performance.
Also bear in mind that new super rules that came into effect in July 2019 mean that some duplicate super funds may now be automatically rolled over by the ATO.
2. Evaluate your investment options
Our investment decisions, and how much risk you are willing to take with how your money is allocated tends to be guided by our current circumstances and the amount of time before retirement While some funds offer options specifically tailored for people of certain ages, some funds still require you to make the decision yourself.
Investment portfolio options offered by super funds are likely fall into one of the following risk categories:
- Low-risk (sometimes also referred to as ‘conservative’);
- Moderate risk (sometimes also referred to as ‘balanced’);
- High-risk (sometimes also referred to as ‘growth);
- Very high-risk (sometimes also referred to as ‘high growth’ or ‘aggressive’).
It could be worth seeking advice catered to your personal circumstances either from your super fund or an independent financial adviser, but at a very general level, here is an overview of how these investment options can work and who may be more inclined to invest where:
- Conservative investment options can relatively safe but generally deliver low returns, and may be suited to older Australians who are close to or in retirement and therefore relatively risk averse;
- Aggressive investment options have the potential to reap higher returns but can be more susceptible to market downturns. This risk profile may be suited to younger Australians who want higher returns and have plenty of time to ride out any market crashes.
Many super funds also offer investment options tailored to their members’ ethical beliefs (such as those that do not invest in certain industries, like tobacco), which is also an avenue you may wish to consider.
While you may not need to tweak your investment options every time you check in on your super, it could be worth considering your circumstances regularly and thinking about whether ityou need to adjust how your super is invested.
3. Make sure you’re with the right fund for you
The difference between the right fund and the wrong fund can be thousands of dollars at the point you retire – so it’s something that can be important to get right. We have two handy guides you may find useful at this point: one for how to choose a super fund, and one for open a new account once you’ve found what you think is the right fund for you.
You can also compare funds using our superannuation comparison tables to see if you can find the right fund for you.
If you’re comparing superannuation funds, the comparison table below displays some of the products currently available on Canstar’s database for Australians aged 30-39 with a balance of up to $55,000, sorted by Star Rating (highest to lowest), followed by company name (alphabetical). Use Canstar’s superannuation comparison selector to view a wider range of super funds.
Fee, performance and asset allocation information shown in the table above have been determined according to the relevant investment profile in the Canstar Superannuation Star Ratings methodology.
4. Check how much of the contribution caps you’ve used
There are limits on how much you can contribute to your super account, both before and after tax. According to the ATO, exceeding these thresholds may result in having to pay extra tax, so it’s something you may wish to keep in mind.
One possible way to avoid exceeding the contribution caps, if you do make personal contributions to your super, may be to simply keep an eye on how much you’ve contributed so far for the financial year. This may allow you to keep track of whether you’re coming close to hitting the cap, and subsequently give you time to restructure any salary sacrifice arrangements you may have or voluntary contributions from your savings you may be making, in order to avoid exceeding the contribution thresholds.
Bear in mind that you may be able to make additional contributions in the current year using your contribution limits for future years using what’s called the ‘bring forward‘ rule.
The ATO offers further guidance on contribution caps.
5. Learn more about salary sacrificing
Salary sacrificing into superannuation can, for some people, be an easy way to kill two birds with one stone – more money going into their super can mean more long-term interest and a larger retirement benefit and depending on your personal circumstances, salary sacrificing could potentially result in a reduction of your tax burden, according to the ATO. Read Canstar’s guide to salary sacrificing for more information on this technique.