For many Australians, superannuation is their second-largest asset after the family home. Yet surprisingly few people regularly check whether their super is actually working as hard as it could be.
Most people focus on their account balance, but the real question is whether their super is on track to provide the lifestyle they want in retirement.
There are several factors that determine how effectively your super is working for you.
The first is your investment strategy. Many people are defaulted into a fund option when they start employment and never review it again. While this may be appropriate for some, your investment mix should generally align with your age, risk tolerance and retirement goals. A strategy that suited you at age 25 may not be the best fit at age 55.
The second factor is fees. While fees can seem small, they are deducted year after year and can have a significant impact on long-term returns. Even a modest reduction in fees can result in a larger retirement balance over time.
Thirdly, consider whether you’re contributing enough. Employer contributions are a great starting point, but voluntary contributions may help accelerate your retirement savings and potentially provide tax benefits.
It’s also worth reviewing any insurance held within your super fund. While insurance can provide valuable protection, unnecessary or outdated cover may be reducing your retirement savings through ongoing premiums. .
Finally, remember that retirement planning is not just about accumulating money. Inflation can steadily reduce purchasing power over time, meaning your super needs to grow sufficiently to help maintain your future lifestyle. .
A simple annual review of your super could reveal opportunities to improve performance, reduce costs and ensure your retirement savings are working as hard as you are.
Disclaimer: The information contained in this article is provided for general guidance only and does not constitute financial, taxation, legal, or other professional advice. While every effort has been made to ensure the accuracy and completeness of the information at the time of compilation, it may not address the specific circumstances, requirements, or objectives of you and/or your business.