Your superannuation is the key to having enough money to live comfortably in retirement. Yet many of us are letting our retirement dreams slip away by falling into some common, and easy to prevent, superannuation traps. Here are the top five superannuation mistakes you should avoid.
Losing track of your superannuation
There are over 3.4 million lost super accounts worth more than $16 billion. If you’ve ever changed your name, switched jobs or done casual work, you might have lost track of some of your superannuation without realising it.
Keeping more than one superannuation account
In 2012 there were nearly 32 million superannuation accounts in Australia, which is an average of almost three accounts for every worker1. If you have different superannuation accounts, you could be chipping away at your superannuation savings by paying multiple fees and insurance premiums.
That’s why it pays to always keep your superannuation in one account. It will also cut down on your paperwork and make it easier to keep track of your superannuation if you change jobs. But before you move all of your superannuation into one fund, make sure you consider any withdrawal fees, your investment mix and any insurance you may lose if you leave a fund. Be sure to speak to your financial planner before making any decisions.
Assuming your employer’s default fund is right for you
Every Australian employer has to offer their employees a default superannuation fund. If you don’t choose a separate fund to have your superannuation paid into, this is where it will all go.
Around 80 per cent of Australian superannuation fund members are in their employer’s default fund — and, for many, it could be the right choice.
That’s especially the case now that the Government’s MySuper regulations have created a new breed of default superannuation funds, with lower costs and standard insurance benefits.
But if you would like more control over how your money is invested, you might prefer a fund that offers more investment choice.
Relying solely on superannuation guarantee contributions
Under current laws, your employer must contribute 9.50 per cent of your salary to superannuation each year. But research shows that at this rate, the average wage earner won’t even have half the super they need for a comfortable retirement.
That’s why it’s worth considering options like pre-tax salary sacrifices or personal contributions from your take-home pay to help grow your superannuation nest egg.
Leaving it too late to boost your superannuation
Even if your retirement is still a long way off, it pays to start building your super sooner rather than later. You might be surprised at how a small increase to your superannuation now could have a big impact in the long run.
To find out more ways to optimise your superannuation, please speak to your financial planner.