Do you know how many super accounts you have in your name? Do you know where that money is, how much there is and how it is invested? If you have changed employers a few times in your life then you could have multiple accounts with your hard earned money in them that you’ve lost track of. As superannuation is usually your second largest asset after your home and is likely to be your largest asset by the time you hit 60, it may be time to start taking it seriously.
According to the RaboDirect Financial Health Barometer survey, over 34 per cent of Gen X respondents said they want to retire before the age of 65.1 Out of all respondents who feared their super would not last, 83 per cent had not made any voluntary contribution to their super in the previous 12 months.2
The first step is to consider consolidating your superannuation accounts. Most people have had a number of career changes and have not consolidated their accounts along the way, which means a multitude of fees are eating away at their superannuation. Collect all your annual reports and set up a spreadsheet or a piece of paper with the following columns, which you can refer to when you contact each fund:
- Name of fund.
- Account number.
- Investment option.
- Total investment fees.
- Insurances: life/TPD/salary continuance.
- Insurance premiums.
Ask each fund for five and 10-year performance figures.
If you don’t have all your super information to hand, the Australian government has a tool that is part of your myGov account that can help you track down lost super. Once you have all this information you can roll your super into your chosen account, which will eliminate unnecessary fees and charges.
Plan for the future: Taking control
You can stick with an existing fund or consider a self-managed super fund – it all depends on what you wish to do with your money and how much involvement you want. For those with a balance over $200,000, a SMSF may be worth consideration because it offers more control and flexibility. Also, if you have a partner, you can pool both your balances into an SMSF.
Consolidating your super into one account, may help you save on fees, you may also find that you get more benefit from compound interest. Ultimately through consolidation of super accounts, you could end up having enough to open a SMSF.
Voluntary contributions Before you start to make additional contributions it might be worth asking yourself if the 9.5 per cent of your salary that your employer contributes to your super will be enough to sustain your lifestyle once you retire. If you think you might need more, then you might consider making voluntary contributions. There are a few ways you can do this, including:
- Salary sacrificing: You and your employer can make an agreement to allocate some of your salary to super as an extra contribution. The contribution is made before your income is taxed.
- After-tax contributions: This is any voluntary contribution you make using your personal money after your income is taxed.
- Self-employed super contributions: If you are self-employed, your voluntary contributions are tax deductible up to a certain cap.
- Using the super contributions optimiser: This is a calculator on ASIC’s MoneySmart website that will show you how your contributions can add to your super balance.
Disclaimer: The views expressed, and any advice given, in the above article are those of the author, and do not necessarily reflect the views of RaboDirect. We recommend that you seek professional advice before making any decisions relating to the matters discussed in the article.