Taking the Wheel of Your Super, Avoiding the Hidden Traps
Taking the Wheel of Your Super, Avoiding the Hidden Traps
Superannuation should be the engine that powers your dream retirement, but many Australians unknowingly throw away thousands by leaving it on autopilot. Imagine setting off on a road trip without checking the oil, tyres or fuel; that’s what happens when you don’t pay attention to your super. Here’s how to take back the wheel.
Staying in a dud fund
Not all super funds are created equal.
The Productivity Commission found that someone earning $50,000 who sticks with a poor‑performing MySuper fund could end up with a retirement balance 45 % lower, about ten years’ wages, compared with choosing a top‑quartile fund.
High fees also eat away at your nest egg; paying just an extra 0.5 percentage point in annual fees can shrink your final balance by around 12 %. Jane and Mark, both 45, realised they were paying too much and switched to a lower‑fee fund, saving over $10,000 in three years, money now compounding for their future.
The lesson? Compare funds regularly and don’t assume your default fund is the best.
If you’re not ready to stop completely, reduce your hours or take on consulting work to test‑drive a new lifestyle. Studies show that extending work life through part‑time roles can enhance financial security and mental health.
Putting off contributions
It’s tempting to wait until “later” to top up your super, but the earlier you start, the more time your money has to grow.
SuperGuide’s modelling shows that if Terry, aged 25, invests $150 a month at 6 % per year for 40 years, he’ll end up with about $278,572, whereas delaying until age 45 and contributing $300 a month for 20 years leaves him with only $132,428. From 1 July 2025, employers must contribute 12 % of your salary to super.
Make sure you’re receiving the correct super guarantee and consider salary sacrifice or personal contributions. Even small, regular amounts harness the power of compounding.
Choosing the wrong investment mix
Super is a long‑term investment, so your asset mix matters.
Funds typically offer pre‑mixed options ranging from conservative (around 20 % growth assets) to aggressive (100 % growth). Growth assets like shares and property can be volatile in the short term but deliver higher returns over the long run. SuperGuide notes that opting for an investment with a higher proportion of growth assets, say, targeting an 8 % return instead of 7 %, could boost your retirement balance by roughly 30 %.
If you’re decades from retirement, a balanced or growth option may be suitable. As you get closer, gradually shift to a more moderate mix to protect what you’ve built.
Holding multiple super accounts
Many people accumulate multiple super accounts as they change jobs, often without realising it.
This means you pay multiple sets of fees and possibly duplicate insurance premiums. Changes to super laws have reduced the creation of unintended accounts, but it’s still wise to search for lost super and consolidate where appropriate.
Consolidation simplifies your finances and stops fees from eating away at your savings. However, see Mistake 7 for an important caution about insurance.
Setting up a self‑managed super fund (SMSF) for the wrong reasons
Managing your own super can sound empowering, but an SMSF isn’t for everyone.
Research suggests you generally need a balance around $200,000 for an SMSF to be cost‑competitive with a professionally managed fund, and ASIC notes that trustees spend over 100 hours a year running their fund.
If someone encourages you to set up an SMSF so you can access your super early or buy a holiday home, beware, that’s illegal. Unless you have the time, expertise and resources, sticking with a reputable industry or retail fund is usually safer.
Panicking during a market downturn
Market crashes are unsettling, but switching your super to cash after a fall locks in losses and means you’re likely to miss the rebound.
In fact, downturns can be an opportunity: your regular contributions buy assets at cheaper prices, so when the market recovers your investments grow faster.
Staying the course and reviewing your strategy periodically is often the best approach.
Overlooking insurance, and risks when consolidating
About 70 % of Australians who have life insurance hold it through their super.
Group cover negotiated by large funds often provides cheaper premiums, and you can pay for premiums with pre‑tax contributions. Underinsurance is a real problem: a 2022 report for the Financial Services Council found that around 1 million Australians are underinsured for death or permanent disability. Review your cover regularly to ensure it meets your needs.
Be careful when consolidating accounts.
Rolling your super into another fund usually cancels the disability and income protection insurance in the account you’re leaving. If the new fund doesn’t automatically accept you or doesn’t offer equivalent cover, you could be left uninsured.
Always check what cover you have and whether the new fund can match it before moving your money, and seek professional advice if you have health issues or rely on your default cover.
Bridging the Gap
Superannuation doesn’t have to be a mystery.
By taking these simple steps, choosing a quality fund, making contributions early, selecting an appropriate investment mix, consolidating wisely, and reviewing your insurance, you can transform your super from a neglected savings pot into a powerful engine for your future.
If you’re not sure where to start, Face Up Life is here to help you bridge the gap between where you are and where you want to be.
Book your free chat today and imagine waking up in retirement with confidence, knowing you’ve made the right choices.
𝘛𝘰𝘯𝘺 𝘋𝘦𝘯𝘴𝘭𝘦𝘺 𝘪𝘴 𝘢 𝘚𝘶𝘣-𝘈𝘶𝘵𝘩𝘰𝘳𝘪𝘴𝘦𝘥 𝘙𝘦𝘱𝘳𝘦𝘴𝘦𝘯𝘵𝘢𝘵𝘪𝘷𝘦 𝘕𝘰. 250867 𝘰𝘧 𝘍𝘢𝘤𝘦 𝘜𝘱 𝘗𝘵𝘺 𝘓𝘵𝘥 𝘵𝘳𝘢𝘥𝘪𝘯𝘨 𝘢𝘴 𝘍𝘢𝘤𝘦 𝘜𝘱 𝘓𝘪𝘧𝘦, 𝘊𝘰𝘳𝘱𝘰𝘳𝘢𝘵𝘦 𝘈𝘶𝘵𝘩𝘰𝘳𝘪𝘴𝘦𝘥 𝘙𝘦𝘱𝘳𝘦𝘴𝘦𝘯𝘵𝘢𝘵𝘪𝘷𝘦 𝘕𝘰.1295503 𝘧𝘰𝘳 𝘚𝘮𝘢𝘳𝘵𝘔𝘰𝘷𝘦 𝘈𝘥𝘷𝘪𝘤𝘦 𝘓𝘪𝘤𝘦𝘯𝘴𝘦 #550455.
