It’s time to take control of your super: Yes, you do have enough to worry about

Taking care of day-to-day money needs can be exhausting. These feelings are often exacerbated during times of volatility, caused by rising inflation and interest rates.

So the very thought of starting to plan your retirement income may be your lowest priority.

As long as your superannuation contributions are handled by your employer, it could seem as though nothing is ‘broken’, so there’s no ‘problem’ to fix.

But that’s not the best strategy. In fact, a global retirement report found a hefty 72 per cent of Australian retirees wished that they had spoken with their super fund much earlier (1).

The good news is that effective management of your super doesn’t have to be that hard.

Yes, it requires some time and attention to detail, but this effort is amply rewarded with higher income when you finally do leave work.

Understanding the shift from saving super to withdrawing it is overwhelming for many people.

That’s another reason why many workers don’t even start to think about this until they reach the age (generally 60) when they have access to their super savings.

But just a modest amount of attention can reap big rewards. To paraphrase the famous Paul Kelly song, from little things, big things can continue to grow …

Effective management of your super doesn’t have to be that hard. Photo: Getty

How do you maximise super before retirement?

The key point is that, regardless of the size of your balance, you still do have enough to nurture.

In fact, the less you have, the more you have to gain.

As with most things, knowledge is power, so understanding the basic rules of super is your best starting point.

The following articles in this five-part series on becoming ‘retire-ready’, will explain the main rules that you need to know.

The useful thing to bear in mind is that you don’t need to know everything about super, just the rules that are relevant to your age and stage.

Ask your fund which strategies relate to your current life stage. You can then concentrate on these specific options and the relevant rules.

Understanding the broader context of retirement income is also useful. Currently about 750 Australians retire every day. But most do not have that mythical $1 million bank balance.

Instead, the median super balance for men aged 65 to 69 is $213,986 and that for females of the same age range is $201,233. (2)

The vast majority of Australian retirees (nearly 70 per cent) will be on a full or part-age pension from age 67.

Remember, super savings, in most cases, supplement an age pension entitlement. Only 30 per cent of Australians start retirement totally self-funded.

And if you are heading into retirement carrying debt, you are far from alone, with recent research suggesting only one in seven of householders believe they will have paid off their mortgage by the time they retire (3).

So it’s entirely normal for retirees to have modest savings and mortgages they can’t quite pay off. But those who actively engage with their super as early as possible are more likely to grow their savings than those who simply ignore it.

Currently, most people’s balances are increasing nicely. The beauty of money invested in superannuation is that, over the long term, it has increased ahead of returns from most other asset classes.

Independent research house, SuperRatings, reports balanced funds returned 9.6 per cent over the 12-month period in calendar 2023.

While you are still working full-time you can further enhance these returns by using strategies such as salary sacrifice or spouse contributions.

Your super fund has qualified advisers who can explain the pros and cons of such contributions.

Talking to your fund also presents the opportunity to review your investment settings. It’s possible that your current settings were chosen by default and so they could be unnecessarily conservative, resulting in lower returns.

Again, discussing these settings relative to your age and work plans makes a lot of sense. You may be able to increase your returns over the next few years, with any increased income compounding to create even higher returns.

In summary, planning retirement income doesn’t have to be overcomplicated.

Starting early is the answer. Now is the time to think ahead to the type of life you would like to lead when you reduce your work.

Knowing your current income, your super returns, your likelihood of being on an age pension and your household needs will help you start to plan your transition calmly and effectively.

Stick with your Industry SuperFund in retirement and your money could go further. Visit compareyourretirement.com today.

Read more of the Road to Retirement series
Part 2: What you need to know about using your super

This content is sponsored by Industry Super Australia.

This information provided in this article is of a general nature only and does not constitute financial or business advice. It is important to consider personal objectives, financial situations or particular needs when making financial decisions.

References: (1) State Street Global Advisors (2018), Global Retirement Reality Report 2018: Australia Snapshot. (2) ASFA November 2023 Update on Superannuation Account Balances. (3) AMP (4) SuperRatings