5 steps for doing a superannuation health check

Regardless of how far off retirement is for you, it could be beneficial to regularly check that your finances are on track.

Taking the 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. For example, if you’re one of the many Australians to have withdrawn money from your super recently under the COVID-19 Superannuation Early Release Scheme, a check in could help you identify strategies for getting things back on track.

Here are five super health-check steps to consider, no matter what stage you are at.

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1. Take a look at your fund’s performance

The extent to which your super balance is growing is arguably the biggest factor in determining how financially comfortable you will be in retirement. If you are working, your employer generally must contribute regularly to your chosen super account, or you can make additional contributions yourself. But just as important is how fast your super is growing due to investment returns.

Your chosen fund invests your retirement savings on your behalf with the aim of growing your balance. However, funds can vary significantly in what they deliver to members in investment growth, so it’s important to keep an eye on how well your fund is performing on your behalf.

You can do this by checking your regular super statements for performance information or taking a look at Canstar’s superannuation comparison tables to see how your fund compares to the other providers on our database.

Remember superannuation is a long-term investment, so paying attention to performance over longer time-frames, such as a 10-year period, may give you a better idea of how well your fund is positioned to deliver growth into the future than just looking at one year of performance data.

That said, investments can go up and down over time, so a strong past performance isn’t necessarily indicative of good returns in the future. This means it’s important to consider performance alongside other factors, which brings us on to our next tip…

2. Check you’re not paying too much in fees

Super funds charge a range of fees to their members. These can include administration fees, investment costs, fees for advice they provide and potentially other fees which will be listed on your super statement. When you see the amount of fees you’re paying each week, month or even annually, it might not look like a massive amount, but over time fees can eat away at your balance and limit the amount of money that’s earning investment returns for you.

What may look like a small percentage difference in the fees you’re charged per year could potentially translate to tens of thousands of dollars of retirement funds saved or lost by the time you’re eligible to cash in your super.

You can compare the fee levels charged by the super funds on Canstar’s database using our comparison tables. If you feel like you’re not getting good value for money from your fund, it could be time to consider shopping around.

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3. Evaluate your investment options

It could also be a good time to ask yourself if your super is being invested in a way that suits your life stage, appetite for risk and even your values and ethics.

Most super funds offer their members a range of options for how their savings are invested. These options can include growth, balanced, conservative, or a ‘life stage’ option which changes your investment mix as you get closer to retirement. Many funds also allow members to tailor their investment to focus on particular sectors or asset classes such as property or bonds.

You may even have the option of setting up your investment mix to only invest in ‘ethical’ companies or to filter out certain industries that you want to avoid – common examples can include companies involved in the extraction or processing of fossil fuels, or the gambling industry.

Whatever approach you take, it’s important to consider the possible implications different investment options could have on your retirement. For example, could your investment choices mean greater certainty but more modest returns, potentially higher returns but more risk, or even higher fees depending on the investment option you choose? It could be worth speaking to a financial adviser to help you answer these questions.

4. Check in on your insurance

Now could also be a good time to take a look at what, if any, insurance cover you have in place via your super fund. Many funds offer a level of insurance by default when you open an account. This may include life insurance, total and permanent disability cover and income protection.

If you are covered as part of your super, consider checking to what extent. For example, how much money would your named beneficiary receive if you pass away and they make a successful claim? Will that be enough? How much of your income would be replaced if you became unable to work? What exclusions, waiting periods, limits and other conditions apply? And importantly, how much are you paying in premiums each week?

Again, it could be worth getting financial advice when thinking about these questions and how they apply to your personal circumstances, as changing your insurance cover, or cancelling it completely, could leave you and your family unprotected if something goes wrong.

5. Think about some of the other super opportunities you could take advantage of

For example, you may want to ask yourself questions such as:

• If you have more than one super account, could you consolidate them into one to help save on duplicate fees? Just remember to consider what you might lose – insurance cover, for example – if you close an existing account.
• Could you contribute more in super, either by ‘salary sacrificing’ from your pre-tax pay or making an additional contribution after tax to top up your balance?
• Should you take a closer look at your pay slip to make sure your employer is contributing the appropriate amount of super?
• Is there financial advice you can access through your super fund? The cost of this may already be covered by what you pay in fees.
• Would it be beneficial to set a reminder to check in on your super again in a couple of months, or even the next time you get a statement from your fund? A regular check-in could well help you stay on track for the retirement you want.

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