Do you know how your superannuation is performing? Have you taken some time to review your fees or check that you are on track to reach your financial goals before retirement?
It doesn’t matter how far away you are from retirement… it is always worthwhile doing a routine super health check to make sure your strategy is working and that your super savings are heading in the right direction.
Regular reviews can be extremely helpful for identifying new opportunities, keeping details up to date and also rectifying any issues that may arise.
Here are our five steps to help you complete a super health check and to make sure that your super is set to provide you with financial security in retirement.
1. Assess your fund’s performance
The last 12 months have been a rollercoaster. The initial outlook when the global pandemic took hold was grim. We saw significant volatility across the markets and there was an expectation of a massive drop in investment returns. But we witnessed extraordinary market recovery and reports from the Association of Superannuation Funds of Australia (ASFA) indicate exceptional benefits this year, with funds delivering close to 20%.
Your own results will vary, depending on the investment options you hold within your super. If you have a higher percentage of growth assets, then it’s possible that your returns are higher than the average. Alternatively, if your investment mix is more conservative with lower risk assets, then your returns are likely to be below the average. But regardless of investment options, it is important to understand how well your fund performs.
Comparing funds can help you determine whether you are happy with your current provider or whether you need to think about making some changes
2. Review your fees
All super funds charge fees… unfortunately it’s something we can’t avoid. They can include administration fees, establishment fees, investment fees, financial advice fees, withdrawal fees… the list goes on. And while each individual fee might seem like a small amount when you see it listed on the account statement, they all add up!
If you can find even the smallest percentage saving on fees, then it could potentially lead to thousands of dollars saved over the life of your super. Comparing super fund fees is a relatively straightforward process that can you can do online, and shopping around could help you find better value for money if you feel your fees are too high.
3. Evaluate your options and consider the forecast
As part of your super health check, you can evaluate your investment options and reassess whether your money is invested in line with your circumstances and attitude to risk. Standard options include growth, balanced and conservative… or you might have an option that relates to your life stage that changes the mix of investments the closer you get to retirement.
It is worthwhile discussing this with us at Verve Group, to determine exactly what works for you in your current situation. Part of that discussion would be to review the forecast as set out in your super fund’s annual statement.
4. Check your insurance
Insurance is another key aspect of your super that you should check. Many funds provide a set level of insurance as a standard inclusion when you open your account, but it’s not uncommon for people to simply leave it unchanged.
We recommend reviewing your insurance to find out exactly what it covers you for. Most often, it is life insurance, total and permanent disability cover and income protection, but the amount can vary. Some questions you should ask are:
How much would your beneficiary receive if you passed away? Would that be enough to support them?
If you had an accident and were unable to work, how much of your income would you receive through your income protection insurance? Will that cover your expenses?
You should also assess the waiting periods, any exclusions and of course the insurance premiums that will be regularly deducted from your super balance. Professional advice can be extremely helpful in determining whether your insurance adequately protects you and your family.
5. Consolidate accounts and find lost super
Finally, a super health check gives you the opportunity to consolidate your super accounts and find any lost super.
If you have more than one super account, it means that you are most likely paying multiple sets of fees and insurance premiums. By consolidating your accounts into one, it can immediately save you money and help increase your super balance by the time you retire. Plus, while you are consolidating, you can easily check for lost super. The ATO has a straightforward process to assist you – either online via the MyGov portal, over the phone or via a printed form.
We know that people often put superannuation in the too hard basket… especially when retirement might seem like years away. But planning now and actively managing your super throughout your working years will make all the difference to your super balance when the time comes to put your feet up.
Speaking to us and we can help make the process easier. If you’d like to find out more about how we can help you, please contact us today.