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12 Tips of Christmas #5 – Prioritise Future You

Getting the most out of your super is the easiest way to help secure your financial future.

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The lowdown

It's not sexy, but your superannuation will play a huge role in making sure that future you is all set for retirement. Luckily, it's also compulsory in Australia, which means that your employer is required to pay a percentage of your salary into this account, which is currently 9.5%.

Close to 10% of your annual salary is nothing to sneeze at – it's the main way many of us will have a nest egg to rely on when we retire. Even if you're not contributing anything extra to your super, chances are that it could end up being your biggest financial asset.

One of the best and easiest things you can do is to merge, or 'consolidate' your super so you only have one super fund. This is really important, because if you've got multiple funds you're paying multiple sets of fees which could greatly reduce your retirement income. Over 6 million Australians have multiple super accounts, so if you're one of them, it's time to get consolidating.

Not only will you avoid paying multiple sets of fees by consolidating, but having your account in one place will also give you better visibility of your retirement savings.

Here's how you do it:

  1. Find your super. The first step is to figure out if you have multiple super funds to consolidate. You can do this by logging in to the myGov portal online, which is linked to the ATO.
  2. Make sure your employer is actually paying your super. Check your superannuation account balance, not just your pay slip.
  3. Choose a new fund. When choosing your super fund it's important to look for a fund with low annual fees, a history of high performance returns (although this is not a guarantee for future returns of course) and an investment strategy that aligns with your personal values and risk tolerance.
  4. Roll over your super balances into your new super fund. If you've chosen a new super fund, you'll need to join the fund before you can consolidate your super into it. There's generally an option to "consolidate your super" when you log in to your new account. If you aren't opening a new super fund and just want to stick with one of the funds you're already with, you can consolidate your super online while you're in the myGov portal.
  5. Let your employer know. If you've switched funds, drop your HR team a note with your new details so they can make sure your super payments are going to the right place.

Don't miss these tips

Compare your fees. Each super fund charges different fees, so you could save yourself a fair bit of cash by comparing just the fees. In a nutshell, the less you pay your super fund in fees, the more you'll be left with in your account at retirement because of the magic of compound interest.

Calculate how much super you need. To figure out how much super you'll need to fund your retirement you need to look at your current living expenses and determine how much these will change when you're retired. You need to also be realistic about the type of retirement you want. If you plan to do lots of travelling, for example, you'll need to budget for more. Take a look at this comprehensive guide to calculating how much money you need for retirement.

Consider making extra contributions. You won't really notice small amounts added to your super now, but these will compound over your working life and leave you with a lot more when you retire. One way you can do this is through salary sacrificing. We'll get onto that next.

Check back each day in the lead-up to Christmas to get our latest expert personal finance tips.

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