Throughout your working years, your superannuation silently works away in the background to build your retirement nest egg, hopefully positioning you for a secure and comfortable retirement. While it’s tempting to assume that everything is running smoothly behind the scenes, there are several proactive steps you can take to ensure your superannuation is on the right track.
Check your superannuation balance
We encourage you to periodically review your superannuation balance to gauge whether you are in alignment with your retirement objectives. This will vary depending on your future lifestyle aspirations. Are you planning for a modest retirement, or do you anticipate indulging in dreams like regular international holidays?
The government’s MoneySmart website suggests aiming for around two-thirds of your pre-retirement income, provided you own your home outright. The Association of Super Funds of Australia (ASFA) delves deeper, estimating that a retired couple requires roughly $70,806 per year to maintain a comfortable standard of living, while a single retiree needs about $50,207 annually (assuming they own their home and receive a partial Age Pension).
If your superannuation balance is not up to par with your aspirations, there are strategies to consider. One option is salary sacrificing, or making contributions from your post-tax earnings. This can bolster your superannuation savings over time.
Monitor employer contributions
Employers in Australia are generally responsible for making Superannuation Guarantee (SG) contributions on behalf of their employees. While the vast majority of employers fulfill this obligation diligently, it’s prudent to keep a watchful eye to ensure you’re not inadvertently shortchanged. If you suspect your employer has fallen behind in superannuation contributions, consider addressing the matter directly with them before involving the Australian Taxation Office (ATO).
Investigate lost or unclaimed super
Changing your name, address, or employment may lead to the loss of some of your superannuation. This could result in the funds being held in an inactive account with another super fund or being transferred to the ATO, where it becomes ‘unclaimed super.’ To locate any lost super, log in to your myGov account and navigate to the ATO online services section. Under ‘Super,’ you can access details of all your super accounts, including forgotten or misplaced ones, and check if the ATO is safeguarding any of your super on your behalf.
Consolidate multiple accounts
It’s not uncommon for individuals who have held multiple jobs to have their superannuation dispersed across several accounts. Managing these multiple accounts can be challenging, and you may be incurring multiple sets of fees that erode your retirement savings. To simplify your superannuation, use the ATO online services through myGov to consolidate your super. Under ‘Super’ and ‘Manage,’ you’ll find the option to transfer your super into a single account. Keep in mind that this consolidation may result in the termination of any insurance coverage you held through your old funds, such as life, total and permanent disability, and income protection insurance.
Reevaluate your investment strategy
Lastly, it’s worthwhile reviewing your current investment approach to ensure that it aligns with your goals. Your strategy often hinges on your risk tolerance and proximity to retirement. For instance, a substantial allocation to high-risk assets like shares can help grow your superannuation over the long term but might lead to significant losses in challenging market conditions. Younger Aussies may be more comfortable with this approach, as they have more time for recovery, whereas those nearing retirement may prefer a more conservative stance to protect their savings. If you’re uncertain about your investment approach, consider seeking advice from a Financial Planner who can guide you through your options and recommend any necessary adjustments to your current strategy.
If you have any other questions about superannuation, retirement, or financial planning, feel free to reach out to our friendly team at APS Financial Planning.
Written by APS Senior Financial Advisor, Paul Hatzigeorgiadis.
Paul has over 25 years of experience in the financial services sector. Over Paul’s history, he has provided advice to an extensive range of clients from wealth accumulators to pre and post retirees advising them on Wealth Creation, Cash Flow Management, maximising Centrelink benefits in Retirement, Personal Insurances, Debt minimisation strategies and Superannuation. Paul is married with an 12-year-old daughter and enjoys spending time with family and friends. Whether it’s assisting clients to meet their short-term goals or working with them over a longer term, Paul enjoys helping guide his clients with their financial future.