7 steps to sort out your super


Why bother saving for retirement when it seems so far away? The trickiest thing about retirement planning is that we simply don’t know how long we’re each going to live.

A typical 30 year old male can expect to live another 51.3 years according to recent data from the Australian Bureau of Statistics, while a female of the same age can expect to live another 55.1 years. And that’s the average person. If you have longevity in your family, earn an above-average income and don’t add to risk factors such as smoking, inactivity or a poor diet you could live well into your nineties.  

Here are 7 quick steps to getting your super sorted in a jiffy.

Consolidate your super funds

According to Choice.com.au, more than 40% of Australians have a secondary, redundant superannuation account that is collectively costing up to $1.96 billion each year. That some 14 million duplicate accounts that could cost members up to $25,000 each in superannuation foregone at retirement, due to the unnecessary fees being paid.

If you want to consolidate your superannuation funds simply head to myGov, login or register, link to the ATO service and select ‘Manage My Super’. Here you’ll find all the super accounts linked to your tax file number and can kickstart the consolidation process to ensure you’re only paying one set of fees.

Choose the right provider

If your fund’s long term performance is producing less returns than that of other funds, it’s time to consider making a complete switch, and not just changing your investment options. To shop around and explore your super options, the government’s MoneySmart website offers a list of comparison sites you can use.

During this process, keep in mind that it’s important not to focus solely on performance. Look at fees and insurance too, because you don’t want to lose important benefits, particularly insurance policies that may be hard to replicate.

Understand your fees

Once you’ve consolidated all your super accounts into one fund, it’s important to understand the fees you’re paying. These fees can include administration fees, advisor fees, investment management fees, and even withdrawal fees, and these are all on top of insurance premiums and taxes, and you don’t want to be paying for more than you have to.

Recent government legislation means super funds now have to be more transparent about the fees they charge, which means it’s easier than ever to shop around and compare funds.

SuperGuide provides an updated list of Australia’s 10 cheapest super funds according to fees and is a great place to start your comparison searching.

Accept more risk

Because you’re young, you have more time between now and retirement, which means more time to maximise your super, recover from any major setbacks in the market and use compound interest to your advantage.

One of the best things you can do for retirement now is to work out how much risk you can afford, according to your years to retirement.

Because you have quite a number of years until retirement, you have more time to pump money into your super. By increasing your investment risk, the odds of getting more bang for your buck (i.e. more return on your super) are much better and could potentially deliver a bigger balance come retirement.

It’s important to note that you should revisit your risk levels as you age because the closer you get to retirement, the less time you have to recover from any losses or significant market changes.

Get a free risk profile to better understand your risk levels today.

Maximise your tax breaks

A great way to top up your retirement fund is through salary sacrificing.  By having your employer deposit an added percentage of your pre-tax wage into your super account, you can benefit from tax concessions that mean you pay less tax on super contributions.

There is an annual limit on how much money you can salary sacrifice for your super, and prior to this financial year it was determined by age, however a cap of $25,000 applies for the financial year to 30 June 2018 for all individuals, regardless of age.

Review your insurance

When you were first registered for a super account, which was probably when you got your first job, your super fund may well have provided you with some basic combination of death permanent disablement and income protection insurance. This insurance however isn’t free; the premiums are deducted from your superannuation balance on a regular basis.

Chances are, if that was ten years ago, you may not be receiving the right level of cover for your current situation, especially if you’ve since taken on something financially significant like a mortgage.

It’s important to ensure your insurances are appropriate, both in type and levels of cover, for your personal situation. If you pass on, will your current death cover allow your partner to continue affording their lifestyle? If you get seriously ill and can no longer work, are you insured for income protection? And how long will you have to wait before your super fund provides you with that sum? These are all things that need to be considered when customising your insurance for your personal situation.

Nominate a beneficiary

And if the worst does occur and you pass away unexpectedly without having a binding death benefit nomination in place, the trustee of your super fund will have a say in how, and to whom, your super account and insurance payouts will be paid.

This means they’ll go through a lengthy formal process to determine who has claim to your super estate, and the result may not align with your own wishes, so it’s important to ensure that you have an up-to-date binding death benefit nomination in place with your fund.

Once you’ve completed these 7 steps, you can sleep easy knowing you’re super is taken care of for the moment, and can now focus on managing more immediate financial goals.

Clover is a personal financial advisor and an online investment service for Australians.

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