Tue 30 Oct, 2018

5 Scary Superannuation Mistakes to Avoid

As Australians, our super is our biggest asset when it comes to saving for our retirement. That’s why it’s important to keep an eye on your super and its performance, no matter how far you are from retiring. However, many are still in the dark when it comes to their super. Or they’re making some potentially damaging superannuation mistakes without even realising it. This can result in some very scary realisations when it comes time to use your super.

Here at Squirrel, we want to help ensure your super doesn’t give you a fright! That’s why in this blog, we’ll tackle the five most common superannuation mistakes Australians make, and how to avoid them.

The Top 5 Superannuation Mistakes and How to Avoid Them

1. Keeping Multiple Super Accounts

One of the biggest mistakes Australians make when it comes to their super is not consolidating their multiple accounts. Not only does that mean you’re paying multiple super fees, but it also means it can be even more difficult to keep track of your funds’ performance.

Even if you are sure you only have one super account, there is a high chance that you could have some lost super from years earlier. Many forget about the super they earned from their very first job, or when they worked casually for an employer. To make sure you don’t have any lost super, create an account on the ATO’s MyGov website and look at the details of all your super accounts.

2. Not Keeping Track of Your Fund’s Performance

Unfortunately, aside from the annual statements they receive, many Australians are unaware of their fund’s performance. Instead, they solely rely on their fund’s manager to keep their super growing. This mistake can often lead to a scary surprise when they get closer to retirement age.

No matter how far you are from retirement, it’s vital to keep regular tabs on your super’s performance. Make sure to get educated on where exactly your superfund is, how much you have, what it is invested in, and how much it’s growing by every year. It may also be beneficial to keep up to date on new superannuation laws to see if any of them will affect you and your fund.

3. Depending Only on Your Employer’s Contributions

One of the great things about Australia’s superannuation laws is that every employer needs to contribute 9.5% of your salary into your superfund every year. Unfortunately, this sum is more than likely nowhere near the amount you will need to retire comfortably. In fact, with life exptectancies soaring, it’s more probable that many Australians could outlive their pension savings. That’s why it’s important to start contributing into your super early in order to increase your super balance for retirement.

With super contributions, you can make both concessional and non-concessional contributions. Concessional contributions are pre-tax contributions you’ve made into your superfund. Annually, you can only make $25,000 of concessional contributions into your super. Non-concessional contributions are post-tax contributions you make into your superfund. These are taxed at $100,000 annually.

4. Paying Too Much in Super Fees

5 Scary Superannuation Mistakes to Avoid | Squirrel Super

This is one of the most costly superannuation mistakes Australians can make. If you have multiple super account, or if you’re not aware of your current fund’s fee structure, you could be losing thousands of your retirement money to high fees. It’s vital to be aware of your super’s fees, and to compare it with similar funds to ensure that your fund’s fee structure is reasonable.

If you have a high super balance, you could potentially save thousands of dollars in fees over your lifetime with a Squirrel SMSF. Unlike managed funds, our fees are not a percentage of your super balance. In other words, no matter how high your super balance gets, our fees will stay the same. Our fees are also per fund, not per person. And since you can open an SMSF with up to three other members, that’s even more money you could potentially save if you switched to a Squirrel SMSF.

To learn more about how you can potentially save in fees with Squirrel, speak to one of our SMSF experts today! 

5. Assuming Your Current Fund is Right For You

As your super balance grows over the years, it’s not uncommon for you and your financial goals to also evolve. While at one point in your life a managed fund was the right choice for you, it could be possible that later in your life, it’s no longer the right fund to help you achieve your retirement goals.

In order to know what type of super is right for you, it’s important to educate yourself on the different funds available. It’s also important to be aware of what your retirement goals are, and how you plan to achieve them. For example, if you don’t have the time to manage your super yourself, but you’re looking for consistent growth, then a managed fund may be right for you. On the other hand, if you’re looking for more control over your superfund and its investments, and you have the time to manage your fund yourself, then a self-managed super fund may be right for you. If you think an SMSF may be the right fund fur you, take our quick quiz to see if that is really the case. However, remember, if you are ever unsure, it’s always best to speak to a financial adviser about your personal circumstances.

Don’t let your super scare you, start avoiding these five superannuation mistakes today for a potentially smoother experience with your super and retirement savings!