Super savings: What to consider at each stage of life

Whether you’ve just scored your first job, have kids, a mortgage and competing financial pressures, or you’re heading into retirement, your superannuation needs depend on your stage of life.

And with government super changes afoot, there has never been a better time to sit down and make a plan for your hard-earned cash.

Getting started

Each year in Australia, more than $2.6 billion is lost in super savings, and the No.1 culprit is multiple super accounts.

Holding multiple accounts means paying more than necessary in admin fees as well as ‘zombie’ insurance premiums, all of which becomes a very pricey exercise over time.

The good news is if you’re a young person heading into the workforce, you’re uniquely placed to avoid such problems.

By learning about superannuation early and establishing good habits from the start, you’ll reap the rewards in the years to come. You’ll also make your life admin so much easier to deal with.

Our super system is designed in such a way that if you don’t nominate a super fund at the commencement of employment, employers will funnel you into their default fund.

Remember, that in many cases you have the power to choose your own fund, and if not, keep a mental note to consolidate, or ‘roll over’ your funds when you shift to your next job.

Another common reason people lose track of their super is through moving house, so always remember to update your address with your super fund.

During a job transition, you should check your super. Photo: Getty

From strength to strength

It’s a little-known fact that those most at risk of holding multiple super accounts are not young people, but in fact Australians aged 41 to 50 years old.

This is also the stage of life when you will probably start looking to the future and get serious about your super.

For some, it may be a time to increase voluntary contributions, ensure your accounts are consolidated and that your chosen fund is performing well.

As an added incentive to get organised, it’s worth noting the federal government recently began shifting inactive super accounts of $6000 or less to the Australian Taxation Office.

The ATO will try to connect the savings from those accounts with active accounts, but if not matched they will receive a return only at Consumer Price Index (CPI), which is lower than the average industry super fund return.

Planning for retirement

From about 55 years on, it’s recommended you develop a super plan that can support you in retirement.

How much super you need depends on a number of variables, including the retirement lifestyle you want, how long you’re likely to live for and whether you plan to spend a large sum of money on travel or paying off your mortgage.

Use this retirement calculator to learn more.

During this phase, it’s also vital you protect the funds you’ve worked so tirelessly to earn over your life, and one way to do that is to ensure your savings are in a high-performing and stable fund.

Remember, Industry SuperFunds deliver all profit back to their members – unlike retails funds that are run to generate a profit to their shareholders. This means they provide above-average investment returns to members, while keeping management fees as low as possible. As a result, Industry SuperFunds have on average outperformed retail funds over the last three, 10 and 15 years.

And if you’re still not sure, use Industry SuperFunds’ ‘Compare the Pair’ tool to compare funds over short, medium and long terms and test whether your savings are on track.

Industry SuperFunds have an easy-to-understand guide on how to consolidate here. There are only 15 Industry SuperFunds that carry the symbol. Industry SuperFunds are run only to benefit members, have low fees and have never paid commissions to financial planners.